The troubled video game company founded by retired Red Sox pitcher Curt Schilling, 38 Studios LLC, filed for Chapter 7 bankruptcy Thursday, leaving behind more than 1,000 unpaid creditors as government officials confirmed they launched criminal investigations this week into the company’s failure.
The Delaware court filing signals that Schilling, who set out to build an ambitious multiplayer online role-playing game, has given up his search for additional capital from Rhode Island or outside investors to revive the six-year-old company. Chapter 7 is the section of the bankruptcy code that companies use when they are liquidating assets.
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Some investments in start-ups pay off; most do not. Some entrepreneurs are successful; most are not. An innovation-based economy depends on investors and entrepreneurs willing to take risks. It's a problem, though, when the parties in a deal believe that risk can be mitigated by "celebrity" and both make ill-advised decisions -- about the scale of an investment and about who should be running the company.
Good post JCW. It struck me as odd how few controls there seemed to be in this venture. Be it within 38 Studios itself or between the company and the State of RI's EODC. This didn't self destruct in a week or a month. I'm guessing that this has been a while in the making and very few people knew it or cared to act on what they knew.
What a colossal financial mess that has been left to Gov. Chafee and the citizens of Rhode Island by the former governor and Mr. Schilling. Shame on both of them.
They owe between $100 million and $500 million? I think that tells a good part of the story right there. And they have assets of 10 million? ...or maybe it's $50 million? With estimates like that, it sounds like nobody was keeping track of the finances. Was there a financial officer of some kind? Did they have any accountants? Were they operating out of a cookie jar? Unbelievable.
Who says there is no second act in life?? Mr. Shilling's name will be long remembered in sports bars and talk radio banter for his exploits during a long professional baseball career and also, in MBA case studies disecting the role of public money used as venture capital in the private sector. The bloody sock and the Rhode Island Blood Bath, a legacy of being " that guy ".
The range of assets and liabilities are normal in a bankruptcy case, they reflect the categories the debtor checks off on the forms. What is most interesting about this, at least for the moment, is the rapid-fire hiring of employees while the company clearly could not afford them. It apparently was required by the terms of the financing. The company had to hire to get money but needed the money to pay its existing staff. One wonders if the company's representations as to hiring and employment, as made to the state of Rhode Island and Providence Plantation, was accurate. If I was a Rhode Island taxpayer, I'd sure want someone comparing the certifications about employment levels to the actual payroll. I'd probably even want forensic accountants to verify that these were living, breathing human beings.
If Schiling is " financially devastated",maybe he can empathize with so many Americans,including residents of RI, who are also in dire straits.
I agree that there's usually a range in assets and liabilities, but not a range where the maximum is 5 times higher than the minimum. Even in bankruptcy, a decently-run company usually has some idea how much they owe. $100-500 million is definitely not much of an idea. It's only one piece of evidence among many, some of which you mentioned, that the company was far from well-run. That can be said, of course, about many companies that enter bankruptcy.
It will be because of the public scrutiny that those casinos built will be built where they should be. NIMBY? What is the Globe talking about? Just yesterday, your paper featured an article about the Taunton casino being supported by the residents? NIMBY? Those that have opposed and recently defeated casino proposals or proclamations of interest have had good reason. Who does the Globe think they are looking down their noses at? I am not against all casinos. I live in Boston's Back Bay. I'm not just against a casino downtown, I happen to be against a casino in any neighborhood and here's why. This City must stop persuing and depending on a strategy for growth based on attracting the rich to live or work here and tourism to bring in quick revenues (including parking tickets ad nauseum). It is a disasterous route to take. World class means having a healthy middle and working class within city limits. We need housing and permanent jobs based on the creative and knowledge based economy. Jobs that also capture the come-back happening in the manufacturing sector. Casinos take revenues out of the public realm, do not bring business to nearby small business people, bring big problems with them and prey on retirees and gambling addicts leading to crime from frauds to robbery and worse. A casino is absolutely NOT the highest and best use of the Suffolk Downs site. I recall that Donald Trumb came to scout casino locations and he said, he's invest in a casino on one of the harbor islands or not at all. Nobody can argue that that he doesn't know a good location from a bad one.
There's nothing in this Curt Shilling story about casinos. I think you clicked the wrong button.