Curt Schilling 38 Studios: Company Overview and Collapse
Curt Schilling 38 Studios was a video game publisher founded by former MLB pitcher Curt Schilling in 2012 in Rhode Island. The company moved from Massachusetts to Rhode Island after securing a $75 million loan guarantee from the state Economic Development Corporation to fund the development of its flagship title, "Kingdoms of Amalur: Reckoning," and a planned multiplayer online game codenamed "Project Copernicus." The company released "Kingdoms of Amalur: Reckoning" in February 2012, which sold over 1.2 million copies in its first month but failed to generate sufficient revenue to sustain operations. By May 2014, 38 Studios filed for bankruptcy in Delaware, defaulting on the state loan and leaving hundreds of employees unpaid. The collapse became one of the most prominent cases of a video game studio failure tied to government-backed financing, leading to multiple investigations and civil suits against company executives and state officials.
The financial structure of Curt Schilling 38 Studios relied heavily on the Rhode Island loan guarantee and private investments. The state provided a $75 million bond package, while the company also secured approximately $50 million in private funding from investors, including venture capital firms and high-net-worth individuals. Internal documents and bankruptcy filings later revealed that the company was burning cash at a rapid rate, with monthly payroll costs exceeding $6 million. The failure to launch "Project Copernicus" and the underperformance of the single-player title's post-launch content pipeline left the company without a sustainable revenue stream. The bankruptcy court ultimately liquidated the company's assets, including its intellectual property, which was sold at auction to recover funds for creditors.
Rhode Island Loan Guarantee and State Investigation
State Guaranty and Financial Oversight
The Rhode Island Economic Development Corporation approved the $75 million loan guarantee in 2010 under a program designed to attract major employers to the state. The guarantee was structured as a term loan with a 10-year maturity and required 38 Studios to meet specific job creation and investment milestones. Company executives, including Curt Schilling, testified before the Rhode Island General Assembly that the studio would create hundreds of high-paying jobs and establish the state as a hub for the video game industry. The loan was backed by the full faith and credit of the state, meaning taxpayers were ultimately liable if the company defaulted. State regulators and the Rhode Island Commerce Corporation conducted reviews of the transaction, but critics later argued that due diligence was insufficient and that the company's financial projections were overly optimistic.
Following the bankruptcy, the Rhode Island state government launched multiple investigations into the approval and oversight of the loan guarantee. The Rhode Island State Police, the Attorney General's office, and the U.S. Attorney's Office for the District of Rhode Island all opened inquiries into potential fraud, mismanagement, and conflicts of interest among state officials who facilitated the deal. Internal communications revealed that some state employees had raised concerns about the company's financial health before the loan was finalized, but those warnings were overruled. The state ultimately recovered a portion of the guaranteed funds through asset sales and legal settlements, but taxpayers absorbed a significant portion of the loss. The case prompted legislative reforms in Rhode Island aimed at tightening oversight of future economic development loan guarantees and increasing transparency in the approval process.
Curt Schilling 38 Studios Lawsuits, Asset Sales, and Ongoing Legal Proceedings
Bankruptcy Liquidation and IP Auctions
The bankruptcy estate for Curt Schilling 38 Studios entered liquidation proceedings under Chapter 7 of the U.S. Bankruptcy Code in 2014. A bankruptcy trustee was appointed to manage the sale of the company's assets, including its game intellectual property