Emperor Mateus of the Palamecian Empire has made a deal with Satan allowing him to raise an army of demons from hell. Using this army, he starts expanding his empire by overrunning surrounding nations. Being northern neighbor of Palamecia and relatively weak in comparison, the Kingdom of Kashuan is a natural first target.
The kingdom is quickly overrun by the superior Palamecian Army, and Prince Scott and Gordon flees to Fynn where they are offered shelter. The defeat of Kashuan allows the Imperial Army to march further north and enslave the people of Bafsk and Salamand, invade Deist and eventually go south and attack Fynn.
Unlike in the case of Fynn, no known resistance movement is established after the country falls to the Palamecians, and whatever remained of the Kashuan Army seems to have either joined the Wild Rose Rebellion or collapsed/disbanded.