R.I. Commerce Corp. reports operating loss of $13.9M in FY ’15

PROVIDENCE – The R.I. Commerce Corporation had an operating loss of $13.9 million for fiscal 2015, associated primarily with the legal costs connected with 38 Studios LLC, according to an audit approved by the corporation’s board of directors Wednesday night.
The operating loss constitutes a $10.1 million – or 269 percent – increase compared with last year, and auditors say it’s “primarily due to expenses related to the conduit debt obligations, principally legal fees and principal and interest payments associated with” the 38 Studios litigation. The lawsuit stems from the state’s $75 million investment into video game company 38 Studios, which went bankrupt in 2012, leaving Rhode Island taxpayers on the hook to pay back the loan guarantee.
Auditors LGC+D CPAs/Business Advisors also noted in the document that total liabilities exceeded total assets by nearly $8.2 million as of June 30.
The R.I. Commerce Corp. previously was known as the R.I. Economic Development Corp. The lawsuit referenced is R.I. EDC v. Wells Fargo, et al.
The board approved the audit with member Donna Sams recusing herself.
Urged by Gov. Gina M. Raimondo, board chairperson, the board also indicated it would amend its bylaws and set up an audit committee by the end of the year. Board member Tim Hebert called it a “high priority.”
“We should do these bylaws because an audit committee is basic governance,” Raimondo said.
The board indicated the deadline for filing the audit was Sept. 30.

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