Sharp Disagreement on Repaying 38 Studios Bonds - ABC6 - Providence, RI and New Bedford, MA News, Weather

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Sharp Disagreement on Repaying 38 Studios Bonds

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by ABC6 Chief Political Reporter Mark Curtis

mcurtis@abc6.com

38 Studios went bust after getting a 75 million dollar loan guarantee from the state of Rhode Island.

Investors bought the bonds to finance that deal.  But now a bill in the General Assembly would prevent those investors from being paid back, at least until a criminal investigations is complete.

State Rep. Mike Chippendale (R-RI) said, "If we start to pay, and then find out we are not legally obligated, it's a lot harder to get that money back."

The bill to block payment to 38 Studios investors is backed by both Republicans and Democrats.

ABC6 Chief Political Reporter Mark Curtis said, "Because these are moral obligation bonds, the state is not legally required to pay them back. Of course if it doesn't pay them back there could be other consequences.

State Treasurer Gina Raimondo (D-RI) spend part of the day touring a Smithfield school, where kids are learning about personal finance.

She says investors will be scared away from Rhode Island if the state does not pay back the bonds from 38 Studios.

Treasurer Raimondo said, "It's a terrible signal. I mean for the good of Rhode Island's bond rating, and our fiscal reputation around the country, we have to make good on this and we can't back away from it."

Governor Chafee also believes Rhode Island should re–pay the bond investors.

"I would not be in favor of anything other than paying back those bondholders, because we do have that moral obligation," said Gov. Chafee (I-RI).

Rhode Island is suing 38 Studios hoping to recover any money that might help pay that debt.

 

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