38 Studios Bankruptcy Hearings Begin

Andy Chalk

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Nov 12, 2002
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38 Studios Bankruptcy Hearings Begin


Former executives at the Kingdoms of Amalur developer face hard questions about the demise of the company.

The wheels of liquidation have begun to turn at the now-defunct 38 Studios, the developer of Kingdoms of Amalur: Reckoning and the unreleased MMO now known simply as Kingdoms of Amalur [http://www.escapistmagazine.com/news/view/118369-Former-38-Studios-Exec-Clarifies-Amalur-Trailer], and that means that the ugly business of figuring out what went wrong will now get underway in earnest. A big part of that process is allowing creditors to question company executives about matters that would normally not be aired in public, and which the executives are compelled to answer.

"It's a free for all," said Boston bankruptcy attorney David J. Reier. "Everything has to be out in the open. There are no more secrets."

The opportunity to fire off some cathartically-pointed questions may be as good as it gets for most creditors, who will probably be left financially high and dry by the bankruptcy. The same goes for former employees who are owed back pay that they will almost certainly never see. 38 Studios estimates that it owes over $150 million, including $116 million to Rhode Island for the loans [http://www.escapistmagazine.com/news/view/102420-38-Studios-Takes-the-Road-and-the-Money-to-Rhode-Island] that attracted it to the state in the first place, and has less than $22 million in assets. Most of that will go to Rhode Island.

A few days prior to the hearing, 38 Studios founder Curt Schilling Facebook [https://www.facebook.com/curt.schilling.56], writing, "[Rhode Island Governor Lincoln] Chafee and his office making sure everyone knows or thinks 38 Studios is in financial trouble... So know [sic] Rhode Island tax payers everyone is quick to write that you will be fitting [sic] the bill for this one. You know what I think you got. A 110 million dollar 'I told you so' from your beloved Governor Chaffee."

Schilling himself is quite possibly the biggest single loser [http://www.escapistmagazine.com/news/view/118053-38-Studios-Founder-is-All-Tapped-Out] in the 38 Studios meltdown; in June he said that he'd sunk more than $50 million of his personal fortune into the company and that the money he'd made as a star baseball player was "probably all gone."

Source: Boston Globe [http://bostonglobe.com/business/2012/07/10/creditors-seek-answers-bankruptcy-hearing-for-curt-schilling-video-game-company/cd2tJ0OmuEgVsp7dZJ4wGL/story.html]


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Hungry Donner

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Mar 19, 2009
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I wouldn't be surprised if Schilling and/or other executives are brought up on fraud charges down the road.
 

Hungry Donner

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Mar 19, 2009
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I should add that I don't think this fiasco is just the fault of 38 Studios, the Rhode Island Economic Development Corporation acted like morons as well, and Chafee seemed happy to let this fail spectacularly. But some of what we've heard about 38's dealings seem sketchy at best, and the debts they left some of their ex-employees (surprise mortgages and moving costs) are abominable.
 

Azuaron

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Mar 17, 2010
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Hungry Donner said:
I wouldn't be surprised if Schilling and/or other executives are brought up on fraud charges down the road.
How would there possibly be fraud charges?
 

rayen020

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May 20, 2009
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Is EA gonna be part of this at all? The way i've seen alot of it is they promised money while contracting standards they knew it wasn't going to uphold. When that happened all the cash they promised was pulled they took they're profit and walked.

I know bashing EA is kinda old fashion and 38 studios probably had other troubles, but from the news and the stuff i heard and seen on it EA's involvement was kinda shady at best.
 

ms_sunlight

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Jun 6, 2011
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Have you played KOA:R? It's not bad, but it's neither fish nor fowl - too big for a story-focussed single-player game, too small for an open-world game or MMO. A lot of people who played it gave up part-way through, or got frustrated at how they kept outlevelling the area they were in.

Shame, because I really liked the combat and the colourful aesthetic, and the voice acting was plentiful and quite decent. If it had been a smaller, more tightly-focussed game, it would have been a lot more fun, not to mention cheaper.

In other words, they did two things badly rather than one thing well. This one seems like it failed because of lack of focus from the top.
 

Hungry Donner

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Mar 19, 2009
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Azuaron said:
Hungry Donner said:
I wouldn't be surprised if Schilling and/or other executives are brought up on fraud charges down the road.
How would there possibly be fraud charges?
It's possible I've misunderstood the timeline of events, but I got the impression 38 continued to use "likely" tax credits as loan collateral after Rhode Island told them they were unlikely to get them.
 

orangeban

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Nov 27, 2009
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I don't know who's fault this whole mess is, but I can't help but have sympathy for 38 Studios, both it's head and it's employees. It's a damn shame really.
 

KeyMaster45

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Jun 16, 2008
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Man this is just painful to watch. From what I understand none of the loan money went to developing Reckoning, it all went to developing the MMO instead while they made Reckoning along side it with funds from the baseball player or somewhere else. (they were never quite clear as to what money) The game was a success and from what I've heard EA was talking to them about funding a sequel, then the governor opened his ignorant trap about what a failure it was and EA vanished from the bargaining table.

I'm sorry but if part of the guy's running platform was that he was against 38 studios moving to the state then I'm inclined to believe that he had it out for them once getting to office. I'm not stupid enough to place all the blame on him, but the credit for the final nail in the coffin certainly goes to him.
 

Hungry Donner

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Mar 19, 2009
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KeyMaster45 said:
I'm sorry but if part of the guy's running platform was that he was against 38 studios moving to the state then I'm inclined to believe that he had it out for them once getting to office. I'm not stupid enough to place all the blame on him, but the credit for the final nail in the coffin certainly goes to him.
Agreed. Even if bankruptcy was a foregone conclusion Chafee could have worked with 38 to make the process as smooth and painless as possible. Instead 38 was frantic and making stupid decisions, which not only hurt the employees but their creditors too. Epic effectively picked up BHG for free since it was closed rather than sold. They may have even been able to bundle BHG and the IP, but instead they kept the IP tied to the MMO, thus ensuring that no one would want it.