Rhode Island exploring costs of not paying 38 Studios bonds

Chafee administration intent on paying back lenders who financed $75 million loan, but also collecting information regarding what it would cost to not pay back debt.

Rhode Island governor Lincoln Chafee remains intent on paying back the lenders who financed Curt Schilling's now-bankrupt 38 Studios, but is also exploring the costs of not doing so.

Image credit: Steven Senne, AP

Chafee spokesperson Christine Hunsinger told The Providence Journal that though the governor wants to fulfil a "moral obligation" to pay the debt, he also wants to be prudent in examining all options.

"[That] doesn't mean you don't analyze what the situation is, or gather data to understand the ramifications of what that decision would be," she said, noting the state has been collecting information about this option for several months.

Rhode Island lawmakers voiced opinions on the matter last month. Supporters of the default plan say taxpayers should not be forced to pay for the 38 Studios situation. Representative and sponsor of one of the bills Karen MacBeth (D-Cumberland) told the Associated Press in April that insurance on the loan will cover the costs.

"The state of Rhode Island cannot afford to put this burden on the backs of the taxpayers," MacBeth said at the time. "Have the insurance company pay the bill. This is why we have insurance. The insurance company understood the risk. Now let them pay."

On the other side of the argument, Rhode Island Economic Development Corporation Chief of Staff John Pagliarini cautioned lawmakers that defaulting on the loan could make it more difficult to finance future projects and negatively impact the state's bond ratings overall.

Under Chafee's latest proposal, an initial $2.5 million payment will be made to lenders, followed by $12.5 million each of the following seven years. That would total about $112.6 million--$75 million for the original loan and $37.6 million for the interest accrued over ten years.

Rhode Island is currently suing Schilling and other architects of the $75 million loan that brought 38 Studios to the Ocean State in 2010. In addition, the state is attempting to sell the Amalur franchise, which it acquired when 38 Studios went under last summer.

Written By

Want the latest news about Copernicus (working title)?

Copernicus (working title)

Copernicus (working title)

Discussion

64 comments
buccomatic
buccomatic

this guy, like everyone else, is getting railroaded by the government.

Hurvl
Hurvl

Even though it wasn't as successful as they'd hoped, I still think there's enough of allure within Amalur.

meatz666
meatz666

I read this news like last month?

tionmedon
tionmedon

another gov.debacle @ it`s finest...................fap it..............

cirugo
cirugo

And why would anyone purchase bonds issued by Rhode Island if they just decide they're not going to pay on them?

TruthTellers
TruthTellers

Schilling and his cohorts are the ones who should be paying back this loan, but I doubt they have the money to do so. In the event that Schilling and company cannot pay the loan, Rhode Island MUST pay the loan back for the sole reason that if the insurance companies are forced to pay it, then what sane insurance company is going to do business with Rhode Island in the future? None and that will indirectly kill Rhode Islands economy... not that it isn't already dead.


sadscooterpipe
sadscooterpipe

Dear RI Govt,

Peter, Joe, and Quagmire should not have to foot the bill for this. 

Thank you.

SeAzhrei
SeAzhrei

I posted pretty much this exact same comment the LAST time pretty much this exact same story went up on gamespot. Only seems fitting.

"The insurance company understood the risk. Now let them pay." Something oddly poetic about that sentence, no?

hatieshorrer
hatieshorrer

Ive got a crazy Idea maybe the government shouldnt be allowed to invest in businesses.  What did 38 Studios do that deserved government funding.  The jobs it was supposed to create are now leaving.

AceJakk
AceJakk

Good ol' government.  "You have to pay us the money you owe us!  Oh, you won't?  Hello creditors, well, see, we weren't paid back either, so...  let me get someone else from the government to bail us out and have the taxpayers cover our stupid decision."

Thanatos2k
Thanatos2k

This is hilarious.  "Oh, well we're clearly not seeing this money again.  Whelp, how about we just not pay our creditors also?"

Rusmurf
Rusmurf

Or they can ask the fed for a no interest loan like they give Chase and BoA.

nickpeck36
nickpeck36

Of course the democrat wants to "simply" default on the loan, it's always easy to spend someone else's money lol.  Of course it's an option but man, it will really kick the state in the arse if they do it.  However, RH took the chance to fund this company and it backfired, thats what happens when you make investments, 50/50 chance.

vadagar1
vadagar1

if I go into politics when can I expect Satan to pay me a visit to take my soul ????

SuperDutchy
SuperDutchy

Why is it that the state can benefit from the demise of 38 Studios by selling off its franchise, ALSO sue its employees in an attempt to make back the lost money AND default on it themselves...I guess it's one more example where it's okay for government to do one thing, but not okay for private businesses and or people to do the same thing.  Apparently there's no such thing as "lead by example" anymore...sigh

TrueGB
TrueGB

I still say it was their fault for giving out the loan in the first place. It was a risky move by the previous senator to bring jobs to the state. The gamble failed.

This is why Kevin O'leary says you should never get involved with government: they don't pay, and when they do, they either tax the hell out of you until they get their money back or claim you stole it.

McGregor
McGregor

Pay your debts Rhode Island. You backed them, even with insurance. The insurance is there to cover the debt if you can't, not if you don't want to. This mentality of, "borrow now, pay later" and "let someone else pay" is why the economy is in the toilet. The reality is, if the people voted for it, then they need to pay for it. If they didn't, then put it on the backs of those in congress that didn't represent the people, and decided to make their own choice.

Ultimately, pay your debts, it's not anyone else's responsibility but yours. You made a bad judgement call; take care of it and move on.

snugglebear
snugglebear

I thought that was a woman's hand on his chest.

LowTechGeek
LowTechGeek

I gotta agree with MacBeth on this one. The insurance company backed the loan and it failed, so they should pay.

CDWJUSTIN
CDWJUSTIN

they are paying it back with taxpayer money... no the tax payers shouldn't pay but they always do... and thats a huge amount of interest for the lenders what the hell... look at it this way banks are the lenders and banks have fucked people left and right without lube id care less if they got a little in return

brxricano
brxricano

"Chafee administration intent on paying back lenders who financed $75 million loan, but also collecting information regarding what it would cost to not pay back debt."

There isn't an English teacher in the world who can make sense of that.


adroge1
adroge1

Rhode Island, you made a bad investment. Get over it. That's the nature of investing. Maybe next time you'll consider things more carefully.

The governor and politicians are doing this to cover their own butts so they can be re-elected next time.

Pyrosa
Pyrosa

The BALLS on these politicians... Wow.

Hurvl
Hurvl

@HipHopBeats Yes, if it's like a regular map with names on it :P. A map with no names on it is useless.

Hurvl
Hurvl

@Emerald_Scott Yeah, he looks as if he's about to swear allegiance to the state of Rhode Island: I do solemnly swear to bring glory and honor to Rhode island and not f**k this partnership up.

Khasym
Khasym

@cirugo That's the problem. Pay the bonds, and the politicians may as well just start endorsing their opposition now. No one who pays taxes in RI, is gonna vote for twits who shafted them for a $75 million dollar video game. 


But refuse to pay the taxes, and you'd better have a great gameplan for financing the state on taxes alone. No one who invests in state bonds, will go near RI bonds, except for pennystock prices

TruthTellers
TruthTellers

To sum it up: the taxpayers are f*cked. They either pay the loan back directly or suffer the economic consequences of not doing so. Schilling and gang are also f*cked, because I wouldn't doubt it if the state puts a lien on everything they own to help finance the payment of the loan.

sonicare
sonicare

@hatieshorrer You make a valid point.  If the governments of states are going to start "betting" on certain companies, then this is the price they pay.  They can make the complaint that they werent given all the details, but if you put yourself on the hook for 75 million, you damn well better do your homework.

AceJakk
AceJakk

@Rusmurf I know of a guy who took a no interest loan without getting approval from the rightful owners of the funds... that guy is now in prison.  Weird how that works.

deathblow3
deathblow3

@nickpeck36 lol he not democrat yet he is currently independent and before that he was a republican. so what the heck are you tallking about????? also the ri is one of the richest states in the union and if RI does pay it back it comes out of the taxes.

Dudeman315
Dudeman315

@nickpeck36 You mean trying to figure out the mess the Republican Governor, Don Carcieri, left him with, yes politicians in RI took the risk with the taxpayer's money. 

Riddick123
Riddick123

@brxricano I am intent on enjoying Kingdoms of Amalur but looking at the ramifications of doing so without actually playing it.

adam270391
adam270391

@brxricano That's actually almost perfect English, the only part you could really argue about is the use of the word "but" right after a comma.

TruthTellers
TruthTellers

@adroge1 They shouldn't be re-elected. They shouldn't have even been elected in the first place.

Fursnake
Fursnake

@Pyrosa 

It doesn't take balls to do dubious, underhanded and snakey things like politicians do...it just takes GALL.

hatieshorrer
hatieshorrer

@sonicare @hatieshorrer  

You miss the point.  What about all the other start ups that dont receive any government funding.  Also if 38 studios would have been created regardless of government funding because people were convinced it would be profitable.  The jobs created by 38 Studios would have been created government funding but probably not in road island.

The message is Government isnt creating jobs just bribing companies to move jobs from one state or district to their own.  If a state or district wants to go broke betting on companies let them theyll go broke well struggle with jobs but keep a stable government.

McGregor
McGregor

@adam270391 @brxricano I guess as is it is confusing, but I figured out what the point they were trying to convey.

Basically, they want to pay the debt, but they are exploring other options, to see which one is the lesser of 2 evils...

brxricano
brxricano

@adam270391 @brxricano Not in the sense of grammar, I meant the insane contradictions that destroy English comprehension as we know it.

adam270391
adam270391

@brxricano @adam270391 hmm, I think they just mean that part of the administration is intent on repaying, while another part is researching other options?

That's how it came across to me in the main body of this article anyway...

Yeah the heading is contradictory but...aren't they usually?