Schilling balks at day in court
In a surprising move, the former Boston Red Sox pitcher and ex-video game entrepreneur Curt Schilling came to a $2.5 million settlement with the Rhode Island Commerce Corporation. The settlement is expected to be approved by the judge overseeing the litigation and is expected to net the state about $2 million after lawyers’ fees are adjusted.
By now, there is not anyone in Rhode Island who pays even tangential attention to the news and has not heard of the great collapse of 38 Studios. The state guaranteed a $75 million loan to the company in 2010 in exchange for operating in Rhode Island and providing needed jobs.
However, not two years later, 38 Studios collapsed into bankruptcy leaving Rhode Island on the hook for the remainder of the $112 million loan, when accounting for interest. Since then, the state assembly has had to take from the tax pool to pay off the remainder of this loan, causing large budget problems and tax increases.
Not all of the burden will be on the state as, in the direct aftermath of the collapse, the leadership of the state of Rhode Island claimed fraud on the part of the bond agencies that approved the loan, on the law firms involved in the deal, on the former Rhode Island Economic Development Corporation (RIEDC), and of course the 38 Studios executives, Schilling among them.
At the present time, Rhode Island has settled with the law firm that worked on the deal for $4.4 million, the former Rhode Island Economic Development Corporation officials for $12.5 million, and Wells Fargo and Barclays for $26.5 million. Altogether the Schilling settlement makes the total amount recovered to about $45 million.
That being said with his current settlement, after lawyers’ fees, the expected balance still left on the loan will be nearly $50 million that the state will have to pay back.
Schilling’s settlement was considered a surprise by many as he had repeated claimed that the trial would be his opportunity to show Rhode Islanders that he had done nothing wrong.
However, it appears that by settling now Schilling and his co-defendants would pay nothing out of pocket as their insurance would cover the cost of the settlement but would not have done so during a trial. All in all there is now only a single defendant remaining in the 38 Studios litigations, who will go to trial soon.