the studio didn't plan any contingency or mitigation for a cancellation
I've seen that in a different industry - a huge client that demands all the resources you have "just in case" and then fucks you over. About the only thing that can help is money in the bank.
There's a certain type of person that decides they need to "own" you, and they can apply a lot of pressure if they are their only client at the time so they make sure that happens.
That really just means the company is take on a contract that is simply too big for them in the first place. From what I read no one fucked anyone over. MS wanted changes in scope in order for the game to continue being funded, company said sure but budget will be blown by 40-60%, MS said, no thanks and simply walked away. This is normal business contract negitations, if it killed the company then the company was taking on a job that was far to big for it as it left them with no contingency