Protesters Urge R.I. to Default on 38 Studios Debt

June 4, 2013

Protesters unhappy with Rhode Island’s failed investment in former Red Sox pitcher Curt Schilling’s video game company urged state leaders last week to default on the money the state owes for the deal.

Supporters of defaulting on the 38 Studios bonds say insurance on the investment will pay bond holders the more than $100 million the state owes. About 20 of them marched to the Statehouse last Tuesday and met with state Reps. Karen MacBeth and Spencer Dickinson, who favor legislation that would prohibit the state from paying the money.

But proposals to default have so far gained no traction in the Statehouse and are opposed by Gov. Lincoln Chafee, an independent, who says the state must honor its debts.

The state’s Economic Development Corp. board in 2010 approved the loan guarantee for 38 Studios with the hope of luring high-paying jobs from Massachusetts to Rhode Island.

38 Studios filed for bankruptcy last year, leaving the state on the hook for more than $100 million. Chafee’s budget proposal calls for the state to make a $2.5 million bond payment in the fiscal year beginning July 1, followed by annual payments of $12.5 million.

Randall Rose, one of several members of Occupy Providence who took part in the protest, said taxpayers shouldn’t be forced to pay the money because they never approved the state’s investment in 38 Studios.

“It’s a bail out,” he said. “We have no obligation to pay.”

MacBeth, D-Cumberland and a sponsor of one of the default bills, said insurance on the bond will ensure bond holders get paid.

“That money means nothing to them,” she said of the insurers who backed the state’s investment. “This may be small change to them, but it’s not small change to us.”

The EDC also opposes the measure. Earlier this year, agency Chief of Staff John Pagliarini warned that defaulting on the bonds could make it harder to finance economic development projects and hurt the state’s bond ratings.

Topics Protests Riots

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