Studio 38 Logo 01 Jun

According to the Providence Journal, The Rhode Island House Of Representatives is ready to begin public hearings to debate the state’s failed investment in 38 Studios. A panel from the state’s House Oversight Committee requested documents related to 38 Studios over a month ago, and have just received those documents this week.

“The perception out there is that we haven’t been doing anything,” House Oversight Committee Chairman Michael J. Marcello said. “But the fact of the matter is we’ve gathered a ton of documents and we haven’t had a hearing because we just got the documents.”

The documents reportedly include a range of financial and contractual records relating to 38 Studios and other applicants to the Rhode Island Economic Development Corporation’s Job Creation Guaranty Program, the same program which awarded 38 Studios the $75 million loan in 2010.

Marcello said the committee will be focusing on two main issues regarding whether or not the state should pay what is owed to bondholders now 38 Studios has gone bankrupt.

The first is whether or not the Assured Guaranty Municipal Corp – the state’s bond insurer for the deal – will be covering the debt, which totals almost $113 million including interest.

“This committee needs to have public hearings as to exactly what happens if the insurance pays,” Marcello said. “There is a misconception out there that if the insurance pays that somehow the state or the EDC is off the hook.”

The second is whether the state properly enlisted an independent, third party to monitor and also periodically check the financial standing of 38 Studios. This was supposed to be the job of International Business Machines Corporation (IBM). But it is currently being debated what exactly the scope of its review was or whether the company was reporting to 38 Studios or the state.

Marcello also said that besides reviewing the documents the committee will also bring in an outside expert to talk about what a bond insurance policy may or may not cover.

(via Joystiq)