Schilling Throws In The Towel On 38 Studios
BOSTON (CBS) - After years of trying to make his video game company profitable, former Red Sox pitcher Curt Schilling is out of the game.
38 Studios on Thursday filed for Chapter 7 bankruptcy, as Schilling gave up his attempt to find new investors.
David Reier at Posternak, Blankstein and Lund tells me the Justice Department will now appoint a trustee to manage a liquidation of the company. Reier says Schilling is throwing up a white flag, because the owners of companies in Chapter 7 lose all control.
In its filing, 38 Studios lists more than 1,000 creditors who are owed at least $100 million, and as much as $500 million.
Reier says a trustee will account for all of 38 Studios' assets, raise as much money as possible selling them, then distribute the cash in accordance with the priorities of the bankruptcy code.
The State of Rhode Island gave 38 Studios a $75 million loan guarantee in 2010, when it lured the company to Providence from Massachusetts. Governor Lincoln Chafee is promising to salvage everything possible from that investment, which Rhode Island is on the hook for.
