Curt Schilling’s 38 Studios Runs Out Of Cash, Files Bankruptcy

Former MLB pitcher Curt Schilling has struck out in the video game business: 38 Studios, the company he founded, has filed for Chapter 7 bankruptcy protection.

Unlike a bankruptcy reorganization, Chapter 7 means that company is done; its assets will be sold off in pieces in an attempt to at least partially satisfy creditors. In late May, all the employee were laid off.

The bankruptcy filing indicates that the company owes in excess of $100 million but has only $21.7 million in assets according to the Boston Herald.

38 studios received a controversial $75 million loan guarantee from the Rhode Island Development Corporation (i.e., Rhode Island taxpayers) to relocate from Massachusetts to Providence, Rhode Island. The state’s governor, Lincoln Chafee, said that “The taxpayers of Rhode Island can have full confidence that if there’s a penny we can get — or a nickel or a dime — we’ll get it.” 38 Studios also had a facility in Maryland that is now kaput.

According to Boston.com, 38 Studios owes money to more than 1,000 creditors, including employees for back pay and vacation time.

In a statement, 38 Studios said the following:

This action comes after several weeks when the company has reviewed, considered and received the recommendations and advice with respect to potential avenues for relief that are currently available. After ongoing negotiations with the State of Rhode Island and potential investors and other interested parties, the company has been unable to find a solution to the current stalemate.

The former Red Sox star who owns 83% of the company reportedly put $50 million of his own fortune into the business. Federal and state authorities apparently are investigating the company but absent fraud, it’s unlikely that Schilling’s personal assets are further at risk for company debts.

The first game 38 Studios came out with, “Kingdom of Amalur: Reckoning,” sold over one million copies but it wasn’t enough to keep the firm afloat. A second game, “Copernicus,” was under development before the company shut down.

Curt Schilling compiled a career 216-146 won-loss record in his MLB career, including a clutch 11-2 post-season mark. He is a three-time World Series champion (Arizona, 2001; Boston, 2004, 2007).

[image credit: Googie Man]