A report on Edge Online goes into further detail about the closure of Free Radical, adding that company founders David Doak and Steve Ellis have already formed a new studio.
Called Pumpkin Beach, the new outfit already has a place holder website registered to Ellis.
According to the report, Doak left Free Radical earlier this month, and will now work with Ellis on a new project and 'hand pick' staff from Free Radical to join them.
About 20 staff were reportedly told they would be welcome to work with Ellis at the new studio - although the remaining 160 staff of the studio were purportedly told at the same time that the closure of Free Radical would leave them without jobs.
Free Radical went into administration yesterday and is known for its TimeSplitters series of games - and to a lesser extent, recent PS3 exclusive Haze.