Hydrophobia developer Dark Energy Digital is said to be on the verge of entering administration.
Multiple GamesIndustry.biz sources claim workers at the studio were informed of the decision to call in administrators last week, and that redundancy notices have already been issued.
The Manchester-based studio is best known for Hydrophobia. It spent three years making the game, which began life as a full priced retail game but eventually saw a digital release at a lower price point, receiving some poor critical reviews.
As well as Hydrophobia and the proprietary Hydro Engine it was built on, the developer owns a World Championship Snooker IP, all of which could be put up for sale.
Writing in the comments section of the GI.biz report, Dark Energy Digital art manager Gary Switzer claims the information presented is "wholly inaccurate". Dark Energy Digital owners Peter and Deborah Jones have yet to issue an official response.