June 7, 2012 at 5:42 PM ET
The video game company owned by former Boston Red Sox pitcher Curt Schilling filed bankruptcy papers on Thursday, less than two years after it won a $75 million loan guarantee from Rhode Island, and federal and state agencies may be investigating the company, 38 Studios.
The Chapter 7 filing indicates that the Providence-based company plans to liquidate.
Last month, 38 Studios decided to lay off most of its approximately 400 employees. It recently had its funding cut by Rhode Island, which had been its major financial benefactor.
The company said it had $21.7 million in assets, mostly personal property, and $150.7 million in liabilities, including $115.9 million owed to Rhode Island.
Schilling owns an 82.9 percent stake in 38 Studios, a court filing shows. The company's name derives from Schilling's baseball uniform number.
"This action comes after several weeks when the company has reviewed, considered and received the recommendations and advice with respect to potential avenues for relief that are currently available," the company said in a statement. "After ongoing negotiations with the State of Rhode Island and potential investors and other interested parties, the company has been unable to find a solution to the current stalemate."
Jim Martin, a spokesman for the U.S. Attorney's office in Providence, said his agency had "been in touch with the FBI and the Rhode Island State regarding 38 Studios," but declined to comment further.
Officials from 38 Studios did not respond to calls and emails for additional comments.
Schilling's company received a $75 million taxpayer-backed loan guarantee from Rhode Island in 2010 as an incentive to move its headquarters, and hundreds of well-paying jobs, to Providence from Maynard, Mass.
It had received almost $50 million of those funds through late May, the state has said.
In May, 38 Studios was more than two weeks late on a $1.4 million loan repayment to the state and failed to make payroll.
The liquidation could leave Rhode Island holding the collateral pledged against 38 Studios' loan.
This includes current and future rights to "Kingdoms of Amalur: Reckoning," a video game launched in February, and to an elaborate, multiplayer game code-named "Project Copernicus," which has had a tentative 2013 release date.
In an interview with Reuters this week, Rhode Isand Gov. Lincoln Chafee called the 38 Studios fiasco "a black eye" for the state.
"I hope we never make any kind of mistake like that again," Chafee said of the loan guarantee. "It just defied all common sense. You look back; how could it have happened?"
Several members of the Rhode Island Economic Development Authority, the body that approved the loan to 38 Studios, have resigned in the past month.
A vocal backer of conservative politicians, Schilling has avoided talking to the media in recent weeks, although he has at times taken to Facebook to praise the "resilience" of his company. He was not immediately available for comment on Thursday.
Schilling, 45, was a six-time All-Star and won three World Series championships with the Red Sox and Arizona Diamondbacks.
In 2004, he became known for pitching a game with bloodstains on his sock after a medical procedure was performed on his injured ankle. In that condition, he helped the Red Sox bring a World Series championship back to Boston for the first time in 86 years.
Schilling last pitched in the major leagues in 2007, and ended his career with a 216-146 record, a 3.46 earned run average and 3,116 strikeouts.