Damnation (and producer of B-movie horror flicks like Dark Ride and Danika, starring Marisa Tomei!), have been laid off. Sure, a tweet announcing this has been floating around since June 23rd, but it appears a former employee, who sent a tip to several media outlets, finally got the news ball rolling. Kotaku confirmed with "several former employees" that the entire development team was laid off.
The tipster also reveals there were bigger "issues" at the studio and mentions that, if anyone has access to US and UK legal records, digging around will reveal those problems. Shacknews followed up and found a paper trail of legal disputes and drama involving Blue Omega, publisher Codemasters and subcontractors working on the game.
Whatever all those layers of problems were, it likely had an influence on the team's product: Damnation had an average Metacritic score in the high 30s.