Red5, the Irvine-based studio founded by ex-Blizzard staff best known for developing MMO shooter Firefall, failed to pay its staff on Christmas day, Kotaku has reported.
According to an anonymous source "close to the studio", several employees shared messages and Facebook posts after they weren't paid on time, while a number of other employees claim to have received the following statement by post.
"I regret to inform you that Red5 currently does not have the funds necessary to meet our payroll scheduled for today Friday, December 25. Due to this, there will not be payroll paid this week," reads a Red5 letter acquired by Kotaku.
"Red5 and The9, our parent company, is currently working to resolve this, during the holidays, as soon as possible. We are hopeful we’ll be able to resolve this and will update the team immediately."
Back in November Red5 was hit with significant layoffs - with some claiming as much as 25 percent of the company's workforce were let go.
Red5 failed to confirm the figure at the time, although the studio did admit some employees had been let go as a result of strategic modifications.
Update: Gamasutra has confirmed these reports with a trusted source. Game Informer has done the same, and also points out that game developer Cher Stewart (an engineer at fellow Irvine-based studio Blizzard Entertainment) has launched a GoFundMe campaign aimed at raising money to tide the shortchanged Red5 employees through the holidays.