Bank sues 38 Studios co-founder over loan debt
38 Studios co-founder Curt Schilling is in even more hot water over the closing and bankruptcy of the development house. Citizen's Bank is suing him for loans he personally guaranteed for the company.
The tragic tale of 38 Studios just keeps getting worse. On top of the developer declaring bankruptcy and an employee's wife revealing details about the company's last days, co-founder Curt Schilling is being sued by Citizen's Bank to recover millions of dollars in loans he guaranteed for the studio.
Although the Providence, RI-based bank has little chance of collecting any money from 38 Studios, the bank said that Schilling personally vouched for a $2.4 million loan for the company, and they are suing him to get it back, according to a report in the Boston Globe. "Schilling has failed and refused [to pay the loan]. This is a straightforward matter of liability," the bank said in its suit.
Court documents show that the $2.4 million roughly breaks down to a $2.06 million line of credit from October 2010 and a 38 Studios' credit card account with a $375,596 balance as of June 7.
The Globe said Schilling guaranteed other loans for the company, including a $1.5 million line of credit from Middlesex Savings Bank, and a loan for an unspecified amount from Bank Rhode Island, in which Schilling used a personal gold coin collection as collateral.
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replyJohn Keefer posted a new article, Bank sues 38 Studios co-founder over loan debt.
38 Studios co-founder Curt Schilling is in even more hot water over the closing and bankruptcy of the development house. Citizen's Bank is suing him for loans he personally guaranteed for the company.-
Another lawsuit involving video games :/
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There have been a lot of those lately ...
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This lawsuit has very little to do with video games.
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I said involving...sigh.
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Yeah, and the lawsuit itself doesn't involve games in any meaningful sense.
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So what does Curt Schilling do from here? He used to be a commentator on ESPN's Baseball Tonight, but I imagine that he hasn't been on TV for at least a month.
Either way, getting a bunch of bank loans from local banks doesn't sound like a solid way to fund a mid-2000's-era MMO. We'll have to wait for more stories on why they had to resort to bank loans instead of picking up a publisher.-
The company was founded and started working on an MMO when everyone thought the sky was the limit on MMO's. Then the market basically became WoW dominating and everything else bombing including the huge ones like Star Wars, Warhammer. With the huge string of failures so investors got scared and stopped giving mmo companies money.
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Thing is, why didn't 38 Studios put the brakes on sooner? The MMO market has been lopsided for a while, and WoW has been declining since late 2010. Brad Shoemaker, in the Bombcast right after 38 Studios closed down, mentioned the concept of a "denial paralysis" state, where an executive knows that stuff is going bad, but doesn't say anything to the workers, out of blind optimism that things are going to suddenly get better once there's funding. Was 38 Studios locked in a denial paralysis state from 2010 through to mid-2012?
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They were hoping for an investor. I guess it happened a few times they got an angel investor at the last minute. Supposedly EA was talking with 38 about making a new Reckoning when the shit hit the fan that Schilling was counting on. And of course when the Governor started speaking publicly about the whole thing no sane investor would touch it.
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What does put the brakes on sooner mean? Just eat the costs of 3-4 years of MMO development and...? The proof of the lack of a ceiling in the MMO market wasn't really in play until TOR. Prior to that you could say it was a lack of quality, too much overlap in the genre, not a big enough developer/IP, not enough marketing, etc.
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...and not get charged by multiple state and federal law enforcement authorities with criminal negligence. Something more graceful than crashing and burning in two weeks would've been less damaging to the state of Rhode Island, and perhaps to the employees, though the "relocation assistance" was apparently already shaky to begin with, as evidenced by 38 Spouse's account.
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I don't think it was that at all. MMOs are THE most expensive games to make. SWTOR took nearly 300 mill to make, and it got done because EA funded it 100% and had an in-house studio do it.
38 Studios was trying to do this with multiple sources of funding, including loans from public and private sources expanded over a period of time. When they started making their game the MMO market was hot, people were throwing money at it, and 38 didn't need 300 million up front if they continued to get chunks of cash along the way (not that anyone would have put up 300 million to start).
Things were looking pretty good. They got 75 million from the state of RI, they probably had some cash coming in from KoA:TR, EA might have thrown them some money for the publishing rights, and they probably had some venture capital lined up.
It was a sound business plan, but the long development cycle ran right into the middle of the MMO market drying up, and investors walking away from the studio. It wasn't mismanagement that killed the company as much as it was the gaming public moving on from MMOs, and more people jumping to F2P Zynga-ish games. Where the consumer goes, so does the investors.
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It's not like this isn't all his own doing.
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I loved reading his interviews. The guys is so into the mmo scene since the eq days, he really knows and loves the space. Alas, the business side seems to have gotten him in trouble.
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The whole executive chain should be brought in really. From reading gamasutras article, it sounds like there was way more going on at the top level.
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