Rumours in Australia are pointing to the complete closure of local development team Krome Studios.
Reports on Friday by Tsumea suggest that the business has closed both studios in Melbourne and Brisbane with the majority of staff let go - although some will be rehired to complete existing projects.
Krome Studios has not replied to requests for comment from GamesIndustry.biz.
The developer has been responsible for Game Room for Xbox Live, and most recently movie tie-in Legends of the Guardians for Warner and Atari's Blade Kitten.
Only last month the Krome team announced a partnership with Emergent to merge middleware and engine teams, and to internally develop a number of multiplatform products for market release next year.
But the company, which once boasted around 400 employees, has been shedding talent over the past two years, most recently blaming the economy for putting a number of staff on notice.