It seems that after purchasing the 1666 title from THQ Ubisoft realized that the contract that Patrice Desilets had at THQ provided for too much creative freedom, and the company apparently also said that Patrice Desilets would be difficult to control.
After the purchase of 1666 and the THQ Montreal studio, initial discussions were apparently held but no resolution was reached. Shortly after that, Ubisoft announced that Patrice Desilets was no longer with the company and that 1666 was on hold for the time being. While Desilets claims that he was terminated, Ubisoft has painted the situation as if it was just a departure from the company.
While Ubisoft says the game is on hold, they claim it has not been canceled; and Ubisoft is clear that Patrice Desilets has no rights to the game under the “turnaround right” clause because he is no longer with the company and the game has not been canceled.
It will be interesting to see how this gets resolved. Based on what happened with Zampella & West after leaving Infinity Ward, we can’t believe that Ubisoft will want this to drag out for any length of time, particularly if the press continues to keep the story alive.