What would happen to a wallet when the company hosting the wallet closes down?
If it's noncustodial, members who carefully stored their recovery seed phrases and/or Private keys would still be able to access and spend their funds using another available noncustodial wallet that allows importation of seeds or private keys.
If they didn't back up the seeds or private keys, the funds would be lost forever.
If they kept funds in a custodial wallet, they would lose the funds forever if the owners of the wallet didn't bother notifying the users to withdraw the funds.
Has any wallet company ever closed down before or experienced issue that affected holders Bitcoin?
Several times!!!