This is what a company looks like when it runs out of money...except for the part of admitting it. I know it sucks for the writers that haven't been paid, but a business not paying $50,000 across more than a dozen contractors is hardly news.
In this case, by his own words, John Steele is either completely unqualified to run a publication or he is completely full of shit. Grants don't just magically disappear...you know one will expire for several months before it does. Subscribers don't just magically stop subscribing...a qualified publisher will see complaints build and will recognize a groundswell of frustration for what it is.
And, seriously, who keeps commissioning work because they're convinced a merger is right around the corner??
I think almost every founder of a new enterprise makes promises like this.
It's not an isolated story. For every successful business that doesn't something insane and wins there are 10 that fail. We never heard about all the other shipping startups that failed and whose employees went home with empty paychecks. We praise this fucked up psychopathic level of risk taking, and then we end up with companies and cut throat and toxic as Uber.
I do grant writing for nonprofit and public agencies (and some research-based businesses). Publicly funded grants generally don't just disappear, except in the case of recission: http://seliger.com/2011/01/09/as-predicted-in-january-2010-t... . We've had clients who've suffered from recissions.
Private foundations, however, can play by just about whatever rules they want, as long as they give away 5% of their assets every year. So a foundation that promises $1 million over three years (say), may give away a third of that in the first year and then say "just kidding" in year two.
Or it may say nothing at all.
I'm not saying that happened here, but I am saying that it's possible for grants to "just disappear," even if that isn't common. I've had clients experience just that.
That is absolutely not true. Even if the grant is well-managed and the outlook seems positive, a foundation can simply change their priorities or staff.
EDIT: clarified industry