Sports

Schilling’s Company Files For Bankruptcy; Feds Probing

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Curt Schilling (Christian Petersen/Getty Images Sport)

Curt Schilling (Christian Petersen/Getty Images Sport)

PROVIDENCE, R.I. (AP) _ Former Red Sox pitcher Curt Schilling’s
troubled video gaming company, lured to Rhode Island with a $75
million state loan guarantee two years ago, filed for bankruptcy
protection on Thursday, and federal authorities have begun an
investigation into the firm.

The filing by Providence-based 38 Studios, which laid off its
entire staff last month, was made in U.S. Bankruptcy Court in
Delaware, where the company is incorporated as a limited liability
corporation. Its sister operation in Baltimore also filed for
bankruptcy.

The Rhode Island company owes $150.7 million and listed its
assets at $21.7 million, according to court filings. 38 Studios
Baltimore owes more than $121.4 million and has assets of more than
$335,000, the filings show.

In both filings, the firm lists its biggest liability as $115.9
million in debt from bonds backed by the state, interest on the
bonds and fees to Rhode Island.

Schilling owns 83 percent of the company, according to the
filings.

Jim Martin, a spokesman for the U.S. attorney in Rhode Island,
said his office had been in contact with the FBI and state police
but didn’t say exactly what it’s investigating.

38 Studios was lured to Providence from Massachusetts in 2010
when Rhode Island officials offered a $75 million loan guarantee
they said would bring hundreds of jobs and millions of dollars in
tax revenue. The state is likely to be on the hook for some of the
company’s debts.

In a statement, 38 Studios said the company tried for weeks to
find a way to stay afloat but concluded bankruptcy was the only
option.

“After ongoing negotiations with the state of Rhode Island and
potential investors and other interested parties, the company has
been unable to find a solution to the current stalemate,” the
statement said.

Schilling did not immediately respond to a message left for
comment.

The firm last month laid off nearly 300 employees in Providence
and more in Maryland. That move came after 38 Studios was more than
two weeks late on a $1.1 million payment to the state _ the first
indication, state officials have said, that the firm was in
financial trouble.

Christine Hunsinger, a spokeswoman for Gov. Lincoln Chafee, on
Thursday described the filing as expected.

“He was well aware that this was one of the possible
outcomes,” she said.

Hunsinger said she didn’t immediately know what impact the
company’s bankruptcy filing would have on the state.

The state government recently selected an outside auditor to
review the finances of Schilling’s company.

Judy Chong, a spokeswoman for the Rhode Island Economic
Development Corp., whose board approved the loan guarantee in 2010,
did not immediately return a message seeking comment.

The executive director of the agency, along with several board
members, resigned last month after the company’s troubles came to
light.
__
Associated Press writer David Klepper contributed to this
report.
(Copyright 2012 by The Associated Press.  All Rights Reserved.)

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