Bankruptcy court hearing for 38 Studios

WPRI 12

Updated: Jul 10, 2012 12:53 PM

PROVIDENCE, R.I. (WPRI) - The 38 Studios saga will move to a courtroom 300 miles south of Providence on Tuesday when a federal judge holds the first meeting of the bankrupt video-game company's creditors.

The company, founded by Curt Schilling in 2006 and lured to Rhode Island four years later with a $75 million taxpayer-guaranteed loan, declared bankruptcy on June 7 in Wilmington, Del., where it was incorporated.

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38 Studios and its subsidiaries owe more than $150 million to more than 1,000 creditors, led by the R.I. Economic Development Corporation, according to court documents.

The company is now being liquidated by Jeoffrey Burtch, the trustee appointed by U.S. Bankruptcy Court Judge Mary Walrath. Burtch visited Providence last month to tour 38 Studios' empty headquarters at One Empire Plaza and take stock of its leftover assets.

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The 38 Studios creditors' meeting on Tuesday - also known as a 341 meeting - is scheduled to begin at 2 p.m. at the District Court in Wilmington. A 38 Studios representative is required to attend and answer any questions posed by its creditors. It's unknown whether Schilling or someone else will appear on behalf of the company.

Rhode Island taxpayers will be represented at the creditors meeting by Thomas Carlotto, an attorney with the EDC's new general counsel, the Pawtucket-based law firm Shechtman Halperin Savage LLP, EDC spokeswoman Judy Chong told WPRI.com.

38 Studios' lead attorney is Laura Davis Jones, managing partner of the law firm Pachulski Stang Ziehl & Jones LLP's Delaware office. She's previously represented other bankruptcy firms including Continental Airlines, Filene's Basement and Zenith Electronics.

Judge Walrath was appointed Delaware's U.S. Bankruptcy Judge in 1998 and is currently up for reappointment to another 14-year term when her current one expires on Sept. 8. Her experience includes the high-profile bankruptcies of Washington Mutual and Solyndra.

The bankruptcy case isn't the only legal matter related to 38 Studios taking place. State and federal law enforcement agencies in Rhode Island are investigating what went wrong and how the company secured a roughly $8.5 million loan from Bank Rhode Island backed by tax credits it never wound up receiving.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

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