TimeGate Studios, developer of Section 8: Prejudice has ceased operation, Kotaku reports. The news comes as a result of two crippling blows the the company. The first was the loss of a legal battle between the studio and SouthPeak Interactive, who published the original Section 8, a retail game. As a result TimeGate was ordered to pay over $7 million in damages and lost the license to the Section 8 franchise. The second came as the developer was hung out to dry for their work in assisting Gearbox Software with development on Aliens: Colonial Marines, a game that was panned by critics. Aliens had a troubled development cycle, and currently is the subject of a class action lawsuit that claims the game was misrepresented by its trailers, and that the final product did not meet expectations given in trailers.
The fate of the Section 8 franchise, and subsequently the standing of Section 8: Prejudice on Xbox LIVE Arcade, is unclear. Presumably a passing of the torch will see the publishing rights fall back to SouthPeak rather than the game being delisted. It’s currently 94th in sales out 575 titles, so it’s quite possible the game is still profitable.