Updating a story we have been blogging about since the summer, the state of Rhode Island has filed a lawsuit against former Major League Baseball pitcher Curt Schilling and his bankrupt video game company 38 Studios.
According to the Associated Press, the state alleges Schilling and 13 other defendants engaged in financial misconduct, neglect and fraud to deceive officials about the company’s financial prospects. 38 Studios filed for Chapter 7 bankruptcy in June.
The lawsuit claims that several 38 Studios executives, banks Wells Fargo Securities and Barclays Capital, and Keith Stokes, former head of the Rhode Island Economic Development Corporation, misled the development agency’s board and broke the law to secure funding for 38 Studios, according to the AP.
The lawsuit comes less than two years after the company received a $75 million loan guarantee from the state of Rhode Island to move its headquarters to the state and create jobs.
38 Studios reportedly got into trouble because some of the games they developed delayed their release dates, forcing them to miss loan payments. In May, the studio laid off most of its 400 employees, reportedly having $21.7 million in assets and $150.7 million in liabilities.
Although an automatic stay through bankruptcy typically halts civil actions, 38 Studios filed bankruptcy, but Schilling as an individual didn’t. Therefore, he is not shielded from litigation personally.
Any individual who has unsecured debt may be facing the same difficult decisions as Schilling. Chapter 7 bankruptcy allows you to discharge unsecured debt, like credit card debt or medical bills, which often go unpaid when financial issues arise.
If your financial situation is a problem, contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.
Law Firm of Kevin D. Judd