The founder of Epic Games, Tim Sweeney, posted this on the official website:
“We’re closing Impossible Studios
When former members of Big Huge Games approached Epic last year, we saw the opportunity to help a great group of people while putting them to work on a project that needed a team. It was a bold initiative and the Impossible folks made a gallant effort, but ultimately it wasn’t working out for Epic.
In addition to providing Impossible Studios employees with 3 months of severance pay, we’ll be giving the team the opportunity to form a new company with the Impossible Studios name and the awesome Impossibear logo.
This means that Infinity Blade: Dungeons is now on hold as we figure out the future of the project.
Tim Sweeney – Founder, Epic Games”