Rhode Island Sues Amalur Dev 38 Studios

So 38 fell apart because they didn't have the money to pay back the loan from the state of Rhode Island. In turn, the state takes the property and sells it for less than $1 million. Now, they (the state) are suing said company for less than half of what they were originally owed, which is still a pretty substantial amount of money.

Does that about sum up the situation properly? If so, where exactly does Rhode Island think 38 is going to come up with the $75 million if they win the suit? If 38 had that kind of money don't you think they could have been well on their way to paying back the loan to begin with?

(some of my information or understanding of this whole fiasco may be inaccurate, in which case please correct me)

I don't think they are suing the company. I think they are suing the people who masterminded the deal between the company and the state. That would mean at least some of the people being sued aren't actually associated with 38 Games, but also some executives from the company.
Also I think you need to disassociate the finances of executives of 38 Games with the finances of the company proper. AFAIK, if a company goes under, normally its shareholders are not personally responsible for the company's debts.

Ok, that makes more sense. The way I was understanding it was the state was suing the folks in charge of 38, which (from a financial standpoint) made zero sense. I took an economics course in college once. In case you can't tell, I failed it.

Yes, but from the source it seems they are in fact suing several people in charge of 38, which makes perfect sense. Just because it was their company doesn't mean that a lot of their own personal wealth was tied into it. In fact, the purpose for pursuing the loan was likely at least in part a way to start the company while minimizing the need to personal investment on the part of the founders. After all, who would want to tie up so much of their own money in a company that they are ruined if the company fails?

Also, I know very little about business, so don't take these statements as authoritative.

If Schilling was telling the truth, no one person has lost more on this venture than he has. Suing him is a pointless, spiteful gesture designed to bolster someone's image.

But then, if you crawl into bed with the devil...Schilling's own damn fault he ended up here.

Hesitantly agree. I don't think government exists to 'help' businesses, so much as ensure they exist within a legal framework. Seeing this sort of investment, even for the sake of "job creation", is a bit insane when government, as opposed to a bank or something, literally gets its money through force; taxes aren't something you can opt out of.

Of course, not everyone feels that way, and reality isn't so easy to predict. I think it is better to blame the system that allowed this to happen, rather than the people who made use of that system. After all, they may have genuinely thought that the loan was good for the state. What justice is there in punishing such intentions?

Well, government loans pretty much *need* to be backed by tax payer money, because that's all they have. And it is in any state's best interests to attract businesses. More business means more jobs, which means a stronger economy. So I don't object to tax payer backed loans in the general sense. But they definitely need as much oversight as possible, because as Rhode Island proved here, things can get pretty messy when the deal goes sour.

So...still no sequel then?

Specifically, this lawsuit is claiming that the accused parties did not accurately represent the risks of the business, and therefore caused approval of the loan when it would have been rejected had RI been better-informed of the situation.

This segment pretty much says it all:

"None of the board members were experts in law, lending, video gaming, or economic development. The EDC Board’s understanding of the transactions was based upon information provided by a number of individuals and companies who acted as advisors (the “Advisors”) to the EDC Board, as well as by Defendants Schilling, Zaccagnino, MacLean, and Wester of 38 Studios. That information led the EDC Board to conclude that the proposed transaction, although not without risk, had a reasonable probability of bringing high quality jobs and creating a new industry in Rhode Island, with 38 Studios as the anchor tenant and a cluster of companies performing related activities."

That's not necessarily enough. After all, it's no secret what the percentage of MMOs
1: Make it big
2: Turn a tidy profit
3: Break even
4: Take losses
5: Tank

If they didn't know, their duty as stewards of taxpayer money put an onus upon them to find out. There are sources, experts and analysts...this information is not mysterious or hidden. They consulted "Advisors" who were apparently independent of 38. Unless the advisors were in some kind of criminal conspiracy with 38 to hoodwink the EDC, there's no justification for the claim.

Their argument is that the "Advisors" in question were more or less doing exactly that--withholding information about the risks and capital requirements of the business. They also argue that the there was an undisclosed conflict of interest with 38 studios (I think in regards to Wells Fargo).

Whether that is true or not is pretty much the case.

On a related note, Amazon has KoA with two DLC packs for 11.99. Couldn't say how long the sale is for though.