Rhode Island 2014 budget signed, includes payments on 38 Studios debt

Rhode Island's 2014 budget, which includes plans to repay the hefty debt left behind by now-defunct game developer 38 Studios, was signed today alongside a statement from Governor Lincoln D. Chafee regarding the state's debt settlement.

According to Chafee, the state's decision to honor the bond repayments was made to avoid "severe consequences" for the state. Chafee's response comes in response to the Rhode Island General Assembly's decision to make the first scheduled payment on 38 Studios' debt of approximately $112.6 million, which includes the initial $75 million loan and $37.6 million in interest. In May, Chafee began looking into the ramifications of not paying the loan's lenders, in addition to public hearings. In June, the state officially declared it would honor the bond repayments.

"I have been unequivocal in my belief that we must honor the moral obligations of the State," Chafee said in today's statement. "If the payment was not made, it would have brought severe consequences — both immediate and long-term — for Rhode Island's finances. While it is difficult to put an exact dollar amount on how much our failure to pay could cost, evidence suggests it could likely exceed $100 million, through increased borrowing costs, a lower credit rating and potential litigation. Beyond near-term costs, there is the broader and longer-lasting question of reputation."

Curt Schilling's ill-fated studio declared bankruptcy in June 2012 and laid off its entire staff shortly after. The studio has since attempted to auction off its sole title, Kingdoms of Amalur: Reckoning, and any associated assets. For a complete look at the history of 38 Studios and its bankruptcy fallout, check out our StoryStream.

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