UPDATE: Gamasutra has received word from Flagship Studios that the company "has seen significant staff cuts."

ORIGINAL STORY: A source close to Flagship Studios contacted Big Download to report that nearly everyone in the development studio has been laid off. The studio, responsible for the development of MMO-lite Hellgate: London, was founded by several notable ex-Blizzard North employees such as Bill Roper and Max and Eric Schaefer.

Nothing is known regarding the fate of Hellgate: London, nor the in-development action-RPG Mythos. Expect official word from the development studio to be released within the next several days.