R.I. EDC Forms Legal Panel to Move on 38 Studios

The Rhode Island Economic Development Corp., whose $75 million loan guarantee two years ago to now-bankrupt 38 Studios LLC has Rhode Island taxpayers on the hook, took a step Monday toward legal action against the video-game company.

The EDC's board, meeting behind closed doors in Providence, voted to establish a litigation subcommittee. In a statement, it called the move "part of the next step of looking into possible legal action related to 38 Studios."

Gov. Lincoln Chafee, who also chairs the EDC, will select the three-member panel.

38 Studios, owned by former Boston Red Sox pitcher and current ESPN baseball commentator Curt Schilling, filed for Chapter 7 protection in June. Court documents revealed 38 Studios owing Rhode Island $116 million among its $151 million in liabilities.

The U.S. Bankruptcy Court for the District of Delaware transferred the case three weeks ago to Rhode Island Superior Court after the EDC and bond trustee Bank of New York Mellon Trust Co. received court approval to seize its assets.

According to the EDC, the subcommittee will provide enhanced review and oversight to legal counsel "and provide timely authority to take action." Chafee earlier this month named Richard Land, a partner at Providence law firm Winograd Shine Land & Finkle PC receiver for 38 Studios.

Meanwhile, Max Wistow of Providence firm Wistow & Barylick Inc., the attorney EDC has hired, is reviewing documents and expects to decide within several weeks whether to recommend any civil lawsuits, the Providence Journal reported.

The Rhode Island State Police, the U.S. attorney in Rhode Island and the Federal Bureau of Investigation, among other government agencies, are examining 38 Studios.

BNY Mellon is the trustee for the $75 million loan the EDC made in 2010 through a bond sale, backed by Rhode Island's moral obligation, to lure 38 Studios to move to downtown Providence from Maynard, Mass.

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