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38 Studios discussions continue encouraging out-of-court settlements

Rhode Island Commerce Corp. lawyer Max Wistow said he has been a part of "general discussions" regarding settlements in the 38 Studios case and is encouraging the R.I. General Assembly to pass a bill pushing for resolutions out-of-court, reports

The Commerce Corp, previously called the Economic Development Corp, is suing former Red Sox pitcher and studio founder Curt Schilling over its failed investment in 38 Studios. Other defendants include officials at 38 Studios, former EDC deputy director Michael Saul and executive director Keith Stokes, two law firms working with EDC at the time, a state financial adviser and investment banks Wells Fargo Securities and Barclays Capital, which were hired by the EDC to help issue bonds for the deal with Schilling's studio.

The EDC approved a $75 million loan guarantee for the studio in 2010, which as a startup brought the promise of creating more jobs for the state. After the studio went under in 2012 and declared for bankruptcy, the EDC claimed its board had been misled into signing off on the loan.

"There's been enough discussion to make it clearly worthwhile to have the legislation passed," Wistow said. He gave no further information as to the nature of the talks or which defendants participated.

Earlier this month, a legislation encouraging possible settlements was introduced in the General Assembly by Governor Lincoln Chafee's administration. The bill would prevent any parties settling with EDC from being hit with lawsuits from co-defendants for damages they are themselves found liable for. The proposed bill would be applicable only to the 38 Studios case and is currently set to be reviewed by the both the House and Senate judiciary committees.

"I submitted this legislation at the request of the governor to encourage settlements in the 38 Studios litigation," judiciary chairman Michael McCaffrey, the bill's Senate sponsor, said in a statement. "This proven legal strategy has been successful at providing an incentive in two other high profile cases in Rhode Island."

When asked if settlement talks were underway, Chafee spokeswoman Christine Hunsinger said the governor is "interested in recapturing the money the state is on the line for" and offered no further comment.

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