June 7 (Bloomberg) -- The video-game company founded by former Boston Red Sox pitcher Curt Schilling filed for bankruptcy after firing employees in Rhode Island, where it operated with help from $75 million in government bonds.
38 Studios LLC filed for liquidation today under Chapter 7 of the bankruptcy code, saying it owes creditors at least $100 million. Its assets total $10 million to $50 million, according to the filing in U.S. Bankruptcy Court in Wilmington, Delaware. Under Chapter 7, a court-appointed trustee liquidates the assets and distributes the proceeds to creditors.
Last year, Schilling moved 38 Studios from Massachusetts to Rhode Island after securing cash from the bonds through the state’s economic-development agency. The company received about $49.5 million, according to a fact sheet provided by the Rhode Island Economic Development Corp.
38 Studios, based in Providence, spent the $49 million it received from the bonds, said Rosemary Booth Gallogly, the state director of revenue. The remaining proceeds are in debt-service reserve accounts, she said.
To help repay the bonds, 38 Studios pledged its video-game assets, patents, software and other property as collateral.
The company had hired best-selling fantasy writer R.A. Salvatore and graphic novelist Todd McFarlane to help design games. It released one role-playing game, Kingdoms of Amalur, through Electronic Arts Inc. and was working on another product, called Copernicus.
The company made a $1.1 million payment to bondholders on May 18, 17 days after it was due. The next payment of $2.6 million is due Nov. 1.
Schilling, 45, won three World Series championships during a 23-year career. His bloodstained sock from the 2004 postseason became a part of Boston history after he helped the Red Sox end an 86-year title drought.
A six-time All-Star, he retired in 2009 after missing the previous season following surgery on his pitching shoulder. He ended his career with a 216-146 record, a 3.46 earned run average and 3,116 strikeouts, the 15th-most in Major League Baseball history.
The case is In re 38 Studios LLC, 12-11743, U.S. Bankruptcy Court, District of Delaware (Wilmington).