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R.I. takes control of Schilling’s 38 Studios assets

BLOOMBERG FILE PHOTO/SCOTT EELLS
THE R.I. ECONOMIC DEVELOPMENT CORPORATION and Bank of New York Mellon Trust Co. will take possession of Curt Schilling's 38 Studios assets.
Posted 8/9/12

WILMINGTON, Dela. - The R.I. Economic Development Corporation and Bank of New York Mellon Trust Co. won court approval to take possession of assets of 38 Studios LLC, the bankrupt video-game maker founded by former Boston Red Sox pitcher Curt Schilling.

U.S. Bankruptcy Judge Mary Walrath granted the Rhode Island organization and the bank’s request at a hearing today in Wilmington, Delaware.

The state economic development agency and BNY Mellon Trust, a unit of Bank of New York Mellon Corp., the trustee for a $75 million loan made to the bankrupt game-maker, asked for permission to take control of the assets, such as games’ intellectual property, and try to sell them, possibly through a receivership proceeding in Rhode Island, and apply the proceeds to what’s owed on the loan.

38 Studios based in Providence filed for Chapter 7 bankruptcy liquidation on June 7 after firing employees.

The agency and bank said in court papers they needed to take action because if the trustee appointed to dismantle the game-maker received permission to abandon computer equipment “all or substantially all of the intellectual property could be irretrievably lost.” The intellectual property, which makes up the “vast majority” of the company’s value, will take weeks to preserve and transfer to new servers, the agency and bank said.

Last year, 38 Studios moved from Massachusetts to Rhode Island after securing cash from $75 million in state government bonds issued through the economic-development agency. To help repay the bonds, 38 Studios pledged its video-game assets, patents, software and other property as collateral.

The company had hired best-selling fantasy writer R.A. Salvatore and graphic novelist Todd McFarlane to help design games. It released one role-playing game, Kingdoms of Amalur: Reckoning, through Electronic Arts Inc. and was working on another product called Copernicus.

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