A little more than two years after former Governor Don Carcieri first talked in 2010 to Curt Schilling about 38 Studios, the company went bankrupt, blowing a sizable hole in the state’s already strained finances, the New York Times reported yesterday. Current Rhode Island governor, Lincoln Chafee, has called the state’s backing of the company "the worst investment that's ever been made, I think, in the history of Rhode Island." Politicians are debating whether Rhode Island can afford to repay the bondholders, or whether it should simply default. Because the bonds are what’s known as moral obligation bonds, the state doesn’t technically have to repay them, but its credit rating could take a hit, and Gov. Chafee has promised that the bondholders would be repaid. Chafee is also suing Schilling and his partners, along with a raft of former state officials, banks and law firms involved in the deal, and a criminal investigation is under way.
