Oh wow.. please tell me who did that, I'd really like to know. Why would they even do that?
Seriously? That was very nearly the status-quo in the 90s.
Tremor Entertainment? 3D0? Midway in the Bay Area CA had at least one layoff like that (prior to closing)
I wish I could remember all of them. They were so numerous that it just became the norm in my mind, and I'm really just left with a few stand-out instances and a burning sense of spite and bitterness in my mind where the facts used to reside.
This kind of went away since games went fully mainstream. Too much publicity if it happens now.