Terminal Reality's last release was The Walking Dead: Survival Instinct which was a first-person shooter featuring Daryl and Merle Dixon in a prequel to the hit TV show.
Before that they had worked on Kinect Star Wars for Xbox 360 and 2009's Ghostbusters: The Video Game. The studio's first ever release was back in 1995 with Terminal Velocity.
There's been no official word yet from Terminal Reality on the reports of closure.
"TRI seems to have finally shut down," Jesse Sosa, a former artist at the studio. "A lot of different emotions are passing through me at the moment. I left there when I saw things going downhill but I have always kept up with them and hoped for the best. Now that they're gone, I'm just kind of feeling nostalgic."
The Facebook page for the studio was looking for focus testers for a new prototype in August and again in October.