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News about Touch and Go's dramatic downsizing has been all over the place today. (Contrary to some early rumors, the label isn't completely shutting down, just shuttering its distribution operation.) Indie labels never have it easy, and those that rely on handshake deals can get screwed when the chips are down. Here's a Reader article from 1999 that tells the story of the Butthole Surfers successfully suing to take their back catalog away from Touch and Go. Given that he's had shit like this to put up with, I'm impressed Corey Rusk is still putting out records at all.
A detailed and typically spirited discussion of this development is underway at the Electrical Audio message board.