The game suddenly crashed to the geosphere while the enemy turn was going on. A few soldiers were killed and Gilliam panicked, then was killed. I guess the game didn't know what to do with the grenade he was holding in his off-hand, for whatever reason.
Here is the relevant bit of the ufoconsole log:
2013/01/21 13:18:47 Quizer has taken control over team 1.
2013/01/21 13:20:11 [STATS] Quizer (Ewan) kills alien (Akrokk Tt Treknk) with Aimed Shot of sniper_ammo (entnum: 55)
2013/01/21 13:20:32 Soldier entered the rescue zone.
2013/01/21 13:20:32 Soldier left the rescue zone.
2013/01/21 13:21:33 Soldier left the rescue zone.
2013/01/21 13:21:54 Soldier left the rescue zone.
2013/01/21 13:22:00 Team 1 ended round
2013/01/21 13:22:00 Team 7's round started!
2013/01/21 13:22:00 [STATS] Mnookk Kkr Kraukk is bleeding (damage: 9)
2013/01/21 13:22:00 [STATS] (Mnookk Kkr Kraukk) was killed (entnum: 54)
2013/01/21 13:22:01 [STATS] alien (Rniuk Kr Zrrosk) kills Quizer (Forde) with Ball of plasblaster_ammo (entnum: 59)
2013/01/21 13:22:07 Gilliam panics!
2013/01/21 13:22:07 [STATS] Gilliam is bleeding (damage: 8)
2013/01/21 13:22:07 [STATS] Gilliam panics (entnum 61).
2013/01/21 13:22:07 [STATS] alien (Kraerak Sk Trevuk) kills Quizer (Gilliam) with Snap Shot of plasrifle_ammo (entnum: 61)
2013/01/21 13:22:07 ********************
2013/01/21 13:22:07 ERROR: InvAdd failed - could not add 1 item(s) of fraggrenade to container 2
2013/01/21 13:22:07 ********************
2013/01/21 13:22:07 Shutdown server: Server crashed
I doubt this can be easily reproduced, but here's the savegame with the mission where this happened anyway.