This happens in corporate hackathons. Especially internal ones dreamed up by mid-to-upper management types who wished they worked at a startup.
I had one employer years ago who did a 24 hour thing with a crappy prize. They invited employees to come and do their own idea or join a team, then grind with minimal sleep for a day straight. Starting on a Friday afternoon, of course, so a few hours were on the company dime while everyone else went home early.
If putting in that extra time and effort resulted in anything good, the company might even try to develop it! The employee who came up with it might even get put on that team!
I don't understand why most companies don't just run sensible, reliable, predictable processes like a Design Sprint when they're looking to break out of a local maximum.
Wow, I have been attending public hackathons for over a decade, and I have never heard of something like this. That would be an outrage!