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The decision was attributed to the games firm's restructuring of its business operations.
Campfire Cabal said, "This decision was not related to the work we've been doing at the studio but was made from a purely financial standpoint."
"We want to make it clear that our management and the rest of the team have not given up on Campfire Cabal yet, and neither have our friends at THQ Nordic. We are still pursuing our options for finding a good resolution to this situation, and THQ Nordic has been very supportive throughout this difficult time."
Campfire Cabal also said it has encouraged staff to seek new roles. It said, "We don't want anyone to have to consider the needs of our company over their own."
In June, Embracer announced a restructuring program that would include shuttering studios.
In an open letter, CEO Lars Wingefors said: "Embracer currently engages close to 17,000 people, and while that number will be lower by the end of the year, it is too early to give an exact forecast on this."
When contacting THQ Nordic about the studio closure, a representative said, "There was nothing to be shared with the public."