Rhode Island House panel launching inquiry into 38 Studios

A Rhode Island House panel is launching an inquiry into Curt Schilling's failed game company, 38 Studios, which has stuck the state with millions in debt.

The Providence Journal reports today that the government group has received thousands of pages of documents this week as a result of a public information request. The committee is now ready to launch a hearing process that could help the state understand how best to tackle its debt.

"The perception out there is that we haven't been doing anything," House Oversight Committee chairman Michael J. Marcello said. "But the fact of the matter is we've gathered a ton of documents and we haven't had a hearing because we just got the documents."

The documents shed light on contractual records related to 38 Studios and others that applied to the Rhode Island Economic Development Corporation's Job Creation Guaranty Program. This is the group that granted 38 Studios the controversial $75 million loan in 2010 that brought the developer from Massachusetts to Rhode Island.

Marcello explained that the committee will focus on two issues concerning whether or not the state should pay the debt owed to bondholders now that 38 Studios has gone under. The first is finding out if the state's bond insurer will cover the debt--estimated at $113 million. The second is examining whether or not Rhode Island officials did their due diligence in making sure the financial standing of 38 Studios was periodically assessed.

Rhode Island lawmakers--and governor Lincoln Chafee himself--have explored the financial costs of defaulting on the loans. However, Chafee has said he wants to pay the bonds to fulfill a "moral obligation" to taxpayers.

Chafee's latest state budget proposal includes a $2.5 million payment made to lenders, followed by $12.5 million each of the following seven years. The budget must be approved by July 1.

Separately, Rhode Island is suing Schilling and other former 38 Studios executives. At the same time, the state is attempting to sell the defunct company's assets, which it acquired when the outfit went bankrupt last year.