Unconfirmed: Massive Layoffs at Silicon Knights

It seems that X-Men Destiny might not be selling quite as well as Silicon Knights was hoping, as 1UP cites "credible independent sources" who indicate that the developer has laid off over 70 employees and is now ran by a "core staff" of only 25 people. This doesn't bode well for a Too Human 2:
Silicon Knights has not officially confirmed the cuts, but two credible independent sources contacted us with the information over the weekend. One wrote that "Silicon Knights has had massive layoffs. They are now down to a core staff of 25 people." The other said, "It may interest you to note that SK laid off all but 25 employees today."

This outcome follows the St. Catharines, Ontario-based studio receiving three recent funding grants, totaling CDN $8 million: $1 million in 2008, invested by the Ontario Media Development Corporation, $4 million in 2010 via the federal government, and most recently, $3 million in July 2011 via the Ontario government.

Silicon Knights president Denis Dyack stated in July 2011 that the CDN $3 million investment would allow the company to improve its technology, hire 80 new people while keeping 97 current jobs and allow the company to become "self sustaining." We do not know at this stage what went wrong, nor how the studio's payroll has shrunk from 97 to 25 in three months. A source says, "I heard they laid off all of HR including Denis' wife," in reference to Joanne Dyack, SK's director of human resources.

UPDATE: Kotaku confirms the news, though it's not quite as bad as 1UP reported:
"Last week Silicon Knights experienced layoffs due to extended contract negotiations falling through with a potential partner," the developer told Kotaku. "We are currently in discussions with other potential partners. The recent Ontario government funding is tied to future performance targets, spread out over the next 5 years, which we will meet."

Silicon Knights declined to say who the partner was, but said it wasn't Activision, who they worked with on their last game.

Earlier this week, 1Up wrote that 75 people had been let go from the company. Silicon Knights tells Kotaku that they laid off 43 employees, or just under half of its work force.