Staff face redundancy as studio attempts to fight off closure, report claims.
Backbone Entertainment is laying off staff in an attempt to avoid closure, sources at the studio have claimed.
It isn't known how many staff at the Emeryville, California-based studio will face redundancy.
The studio, which was founded in 1992, has previously specialised in game development on PSP and digital platforms.
It developed PSP Rock Band spin-off Rock Band Unplugged, both Sonic Rivals titles and ported a range of retro titles to current-gen consoles.
Its most recent project was a sequel to downloadable shoot 'em-up Zombie Apocalypse, Zombie Apocalypse: Never Die Alone.