GRIN, who you may know best as the creator of Capcom's Bionic Commando action game, claims that it went bankrupt due to an insane relationship with Square Enix. The company had been working on a "Nordic themed" Final Fantasy spin-off which never came to fruition. The company spoke out (to Swedish publication Aftonbladet) about its relationship with Square Enix, and the picture it paints isn't a pretty one.
The spin-off codenamed "Fortress" never had a chance, according to GRIN founders Ulf and Bo Andersson, because Square Enix was erratic, unreasonable, and contrary in its dealing with GRIN. GRIN says that Square Enix didn't pay any of the $20 million contract it had with the studio to develop the game, even though it met every milestone it was supposed to right up until it went bankrupt in August 2009.
GRIN also claims that Square Enix told them that they didn't like the game's "Nordic style" - despite the fact that Square Enix hired them to deliver such a style. Grin also claims that Square Enix told them that milestones should be filed to its legal department, that they should "fax" code and music to them, and that they would reject anything they sent to them.
Some of GRIN's claims are over the top and hard to believe - particularly the bit about Square Enix wanting GRIN to fax game code. As is usually the case, the truth is somewhere in the middle of the mess, and GRIN has to take some responsibility for the games it developed that ultimately failed.
Source: The Escapist