38 Studios is still looking for additional assistance from the state of Rhode Island to keep the company afloat, according to local news station WPRI. 38 Studios founder Curt Schilling met with the Rhode Island Economic Development Corporation (RIEDC) in an emergency meeting today, but the closed-door meeting ended with no solution. The state is still determining how it should proceed.
"How do we avoid throwing good money after bad?" asked Rhode Island Governor Lincoln Chafee.
38 Studios has already received $49.8 million of the $75 million load from the state, according to documents obtained by WRPI. The studio defaulted on its May 1 payment of $1.125 million, leaving Rhode Island in a difficult position. The RIEDC set aside $12.8 million of the $75 million loan in case of a default by 38 Studios.
"Well we had a very generous proposal that 38 Studios took advantage of. Now we're in some difficulty with that. Very generous proposal," added Governor Chafee.
"[38 Studios] still has the option to cure the existing default by paying the $1,125,000 guaranty fee that is past due. In the meantime, we will continue to talk with 38 Studios and develop additional information, and will resume the Board meeting at our regularly scheduled meeting on May 21," read a statement from the RIEDC to WPRI. The statement included a fact sheet detailing the financial situation.
In the event that 38 Studios does shut down, the situation will actually leave the Kingdoms of Amalur IP in the hands of the state. Joystiq obtained documentation released by the RIEDC that shows that all present and future IP from 38 Studios was put up as collateral for the loan.
"Based on what information I've been able to review on the 38 Studios situation, it appears that the funds they received from the RIEDC were secured by collateral that amounts to all of 38 Studios assets, including all of their intellectual property," attorney and Law of the Game editor Mark Methenitis told Joystiq. "That would include all the rights to Kingdoms of Amalur and any other games they may have in development, even if no information about those titles has ever reached the light of day."
"So, the RIEDC could then sell the rights in all of the Kingdoms of Amalur to another developer to offset the millions owed by 38 Studios, and this sale would typically be an auction-style sale to the highest bidder. As a secondary issue, if the sale of all those assets repossessed ends up being more than is owed, the RIEDC will theoretically owe those funds back to 38 Studios. Practically speaking, assets sold after a repossession are usually a fire sale situation and rarely break even from the amount owed."