Residents of Rhode Island can take solace in the fact that if 38 Studios were to fail today it would own the rights to the studios' current and future intellectual properties: Kingdoms of Amalur: Reckoning and its MMO "Project Copernicus." All future revenues from both titles would also go towards paying down the debt too - you know, the $75 million bond plus the interest through 2020.
All this information comes from this Joystiq report, which relies heavily on the legal expertise of attorney and Law of the Game editor Mark Methenitis and documents released by the Rhode Island Economic Development Corporation (RIEDC) today. According to the documentation, 38 Studios' intellectual property rights were put up as collateral to the RIEDC when they signed the $75 million deal in 2010 and assigned to a trustee. The sale of that collateral would go to bondholders.
"What that means, in brief, is if they default on their obligations to the RIEDC, then the RIEDC can turn around and take possession of as much of that as is necessary to pay off the debts owed. It's kind of like buying a house or a car and then failing to make payments; the lienholder – usually the lending institution – can repossess that house or car and resell it to offset their losses from your failure to pay," Methenitis told Joystiq.
While it's interesting to discuss what would happen if 38 Studios defaults on its loan, it should be noted that the company isn't dead yet and that we are dealing in hypotheticals.