Future Remains Uncertain for Schilling’s 38 Studios
Wednesday, May 30, 2012
Governor Chafee on Monday said he was just trying to protect state taxpayers when he chose to reveal sensitive information about Curt Schilling’s nearly-defunct video game company in recent weeks.
In Tuesday’s Providence Journal, Schilling claimed Chafee scared off potential investors when he said the state was trying to keep 38 Studios solvent two weeks ago and then again when he revealed the June 2013 release date for Project Copernicus, the game that brought Schilling’s company to Rhode Island in the first place.
“I don’t believe [my comments] scared away investors,” Chafee said during a State House press conference. “An investor is not going to be scared away by some Governor’s comments.”
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But last week, with the company unable to make payroll and the state unwilling to offer Schilling tax credits or bridge financing to keep the company afloat, 38 Studios laid off every single one of its employees.
Because of the mass layoffs, the company is now facing its second default this month. Previously, 38 Studios was unable to make a $1.125 million payment to the Economic Development Corporation (EDC). The company then attempted to pass a bad check, but it was returned by the corporation. 38 Studios made the payment a day later.
During the press conference, Chafee, who has faced criticism for his role as chairman of the EDC, said he has every reason to believe the corporation did its due diligence when it came to oversight over the company. He said monthly reports were provided and suggested Treasurer Gina Raimondo’s comments about companies not going broke were “inaccurate.”
“I do believe there are companies that fail overnight,” he said. “That does occur. “They implode.”
Chafee said he still intends to move forward with a forensic audit of 38 Studios, but noted that it appears as though the company hit its benchmarks required in the loan guarantee agreement. Asked if he feels the EDC did everything right when it comes to Schilling’s company, he said, “as far as I’ve learned so far.”
But that hasn’t stopped Chafee from attempting to clean house on the EDC board. On Monday he announced that Lynn Singleton, president of the Providence Performing Arts Center, has resigned. Singleton joined Helena Foukes (the vice chairperson) and executive director Keith Stokes on the list who have left the EDC following the 38 Studios collapse.
Chafee has also indicated the several board members will not be retained and said he is currently seeking new board members.
As far as the company goes, Chafee said he still hopes that the company can turn its financial situation around, but acknowledged that he isn’t optimistic.
Asked if he can still work with Schilling, Chafee said, “I can work with anyone.”
Dan McGowan can be reached at [email protected].
