The studio can reportedly bring other subsidiaries and will continue to develop Star Wars: Knights of the Old Republic - Remake.
CEO Lars Wingefors says that though the company's restructuring is approaching its "final stretch", more layoffs may still follow.
The company announced a restructuring program last year, which has resulted in widespread layoffs, studio closures, and project cancellations.
"The global economic context, challenges of our industry and Embracer's comprehensive restructuring have finally impacted our studio," the developer says.
Reports indicate the project was to enter production this year. Eidos Montreal will allegedly see layoffs and work on an original franchise.
The Gearbox Entertainment-owned studio, which has previously provided development support on Tiny Tina's Wonderlands and Diablo 4, employed over 400 people prior to layoffs.
The project was allegedly rebooted as a "what if" remake of TimeSplitters 2 in early 2023, with Free Radical leadership having been unwilling to commit to the battle royale vision.
Developer Free Radical Design was recently shut down by Embracer Group, a little over two years after its re-establishment.
Embracer Group's mass layoffs as part of its internal restructuring program are continuing, and have this time hit Danish studios 3D Realms and Slipgate Ironworks.
Recent reports have claimed that the remake has continued to stumble into behind-the-scenes issues.
Reports had previously indicated that the TimeSplitters studio was facing closure prior to Christmas amidst turmoil at parent company Embracer Group.
New World Interactive is the latest studio to be affected by the restructuring at Embracer Group.
The layoffs come on the back of "the lack of approval and therefore financing" for Project Black, an in-development unannounced project.
Plaion exec Lars Jannsen has reportedly said in an internal email that Free Radical Design faces "potential closure" on December 11.
"It's been an agonizing process to see the sort of headcount [reduction], but we know it's a necessary thing for us to hit our new and needed goals," says interim chief strategy officer Phil Rogers.
Journalist Jason Schreier has said that contrary to recent reports, the remake is still being worked on by some people at Saber.
Journalist Jeff Grubb has claimed that the Knights of the Old Republic remake is not in development at any Embracer studio.
However, the developer says it's confident that sales will pick up again as the game gets more updates as part of its live service plans.
The company has been shuttering studios, cancelling projects, and laying off employees in order to save costs.
The company says this is "due to a softer launch where an unforeseen error relating to external matchmaking software impacted the experience for gamers."
