38 Studios Faces More Legal Trouble

[Andy Chalk]

38 Studios Faces More Legal Trouble

Rhode Island has voted to use some of the money recovered from 38 Studios to launch a new investigation into 38 Studios which it hopes will allow it to recover more money from 38 Studios.

38 Studios, the Curt Schilling-led developer of Kingdoms of Amalur: Reckoning, is no more (and hasn't been for quite some time) but that doesn't mean that its problems are over; or, more accurately, the problems of many of its former executives as well as ex-high-ups at the Rhode Island Economic Development Corporation, who are facing a potentially devastating lawsuit as a result of the studio's collapse. A judge ruled in late August that the suit may proceed [http://www.escapistmagazine.com/news/view/127271-Judge-Rules-38-Studios-Lawsuit-May-Proceed], and now it appears that even more trouble may be on the horizon.

The Rhode Island EDC voted last week to allow the federal bankruptcy trustee overseeing the case to use up to $150,000 of the money recovered from the company to launch investigations into other potential claims against its former officers and other involved parties. "There is the potential that he can bring in additional monies," EDC attorney Thomas Carlotto said.

In order to proceed, the trustee must also gain the approval of The Bank of New York Mellon, the bond trustee and the bond insurer, so it's possible that the idea won't ultimately gain traction. But given that the lawsuit appears to have at least some modicum of merit based on the decision to allow it to proceed, and the relatively trifling amount of money involved - 150 large is couch-cushion change when you're on the hook for almost $100 million - it doesn't seem all that unlikely that Schilling and company could be facing a new set of headaches in the fairly near future.

Source: The Republic [http://www.therepublic.com/view/story/69e4eed25df147d28aa1985e1d6f96a6/US--Schillings-Gaming-Company]


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[Saulkar]

Using money won in a court case to fund addition litigation (am I using the right term in this context?) against the same people with the explicit purpose of acquiring more money? That does not sound like it should be legal, why is it?

 

[KeyMaster45]

Using money won in a court case to fund addition litigation (am I using the right term in this context?) against the same people with the explicit purpose of acquiring more money? That does not sound like it should be legal, why is it?

Because by all accounts it would appear Rhode Island's governor has a serious grudge against 38 studios for reasons that we can only begin to comprehend.

This reminds me that I need to finish playing Reckoning. It's a damn fine game, but man is it long.

 

[SonOfVoorhees]

They destroyed a studio that brought out an interesting and fun game. We wont get a sequel that would have been alot better. An now they are kicking the studio when its now. Its disgusting. They already sued and won, i hope they lose the next case and lose all their money as well.

 

[Kevlar Eater]

At this point, Rhode Island is beating a horse so dead the only thing left are atoms. Anyway, I hope more than just Schilling gets their ass handed to them for escaping on a golden parachute as 38 went tits-up.

 

[sirjeffofshort]

At this point it's hard not to feel bad for 38 and pretty much everyone involved in this. I'm not exactly sure why they're investing some of what they already GOT to try and further bleed a dry stone, it honestly just seems like childish posturing to me.

 

[The Apple BOOM]

I'm reminded that barely anyone on the Escapist watches baseball. If they did, they'd realize that Curt Schilling is getting no where near the hate he deserves. He screwed around with others people's money recklessly and ran away when the law wasn't on his side. This man needs to be in jail.

 

[Albino Boo]

Using money won in a court case to fund addition litigation (am I using the right term in this context?) against the same people with the explicit purpose of acquiring more money? That does not sound like it should be legal, why is it?

It is not money from litigation but money that the person who is charge of shutting down 38 studios has recovered. This money most likely source is from the sale of assets of the former company. Furthermore this money is not being used to pay for litigation but an investigation of the books of 38 studios to see if they can find grounds for negligence claims.

 

[Something Amyss]

Using money won in a court case to fund addition litigation (am I using the right term in this context?) against the same people with the explicit purpose of acquiring more money? That does not sound like it should be legal, why is it?

Because they think worse wrongdoings were done? It's not like they're exactly going after them on identical grounds.

I mean, this still strikes me as "kicking them when they're down," but....

Hmmm... Wrongdoings. Does Graham Stark play their lawyer?

 

[Kilo24]

They destroyed a studio that brought out an interesting and fun game. We wont get a sequel that would have been alot better. An now they are kicking the studio when its now. Its disgusting. They already sued and won, i hope they lose the next case and lose all their money as well.

Rhode Island provided the loan in the first place, and is simply trying to get the money back. It's not a palatable affair, but I don't blame them for their current actions (even though I doubt they'll succeed).

By all accounts, though, they shouldn't have granted the generous loan in the first place. Curt Schilling used his fame to secure it, but he didn't have the business credentials to make it a safe investment. Gambling with public money like that is ethically questionable.

That's certainly not to say that Curt Schilling is faultless - indeed, he's the key person in the whole fiasco. It's a shame because he seemed very passionate about game development and frankly I doubt he had any intent to defraud anyone, but his willful naivete about running a business ran it into the ground. It's one thing to be launch into a massive, risky project without prior experience; it's another to launch into a massive, risky project without prior experience and also refuse to heed the warning signs and the advice of the consultants he hired to provide that advice. He ran the business with little regard for how much money he was spending, and, when the money supply was quickly dwindling, kept his head in the sand and expected to save himself with further loans fuelled by his celebrity. And in trying to keep himself and everyone else optimistic, the first warning to all the employees was when their paychecks suddenly bounced without warning.

Honestly, I think that Curt Schilling has suffered more than enough for his mistakes. He lost his considerable personal fortune and any hope at business credibility he had. But that's unfortunately not enough to pull the money back out of thin air, so the investigation progresses.

 

[Andy Shandy]

And the sad story gets even sadder.

Shame too, I quite enjoyed Kingdoms Of Amalur and would've enjoyed seeing it continue.

Oh well =/

 

[Dr.Awkward]

I'm okay with this if they keep 38 Studios and Curt out of this. As for the execs, have at them, and punish them hard. We need a major case like this that can show that the legal system CAN punish executives if their "business practices" and "spending habits" causes a company to crash and burn, and prove to other execs that there is a very high degree of responsibility behind their jobs, which can result in very dire consequences.

 

[teebeeohh]

Using money won in a court case to fund addition litigation (am I using the right term in this context?) against the same people with the explicit purpose of acquiring more money? That does not sound like it should be legal, why is it?

Because by all accounts it would appear Rhode Island's governor has a serious grudge against 38 studios for reasons that we can only begin to comprehend.

This reminds me that I need to finish playing Reckoning. It's a damn fine game, but man is it long.

i think it's a combination of just general "i don't get dem video games" and the fact that he was running for the office one his main arguments was that his predecessors economic policies were crap and 38 studios was his main example(largely because he doesn't think video games are actually an industry making more money than movies).
this might all be wrong or half truth but i think i remember reading something like it when the whole thing went down.

 

[Callate]

Bleed, stone!

At this point, I'm seriously beginning to wonder how much this is actually about the money and how much is so much political ass-covering. "We were betrayed and misled, and we will take our righteous vengeance! It is not that we made a terrible, terrible decision with other people's money, largely without their consent! Look over there! Betrayal! Righteous vengeance...! Watch the righteous vengeance, now."