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According to the rumors, Kotaku has learned from other developers in the San Diego area (where Bottlerocket is located) that Namco Bandai walked into Bottlerocket's offices on Friday and took away the game's dev kits, all of the assets and all of the in-development code. The rumors also state that the company plans to have the Afro Samurai team complete development on the game, which is due in the Spring.
Namco Bandai revealed they were publishing the game last April in Electronic Gaming Monthly and unveiled the first trailer at the New York Comic-Con over the weekend. The trailer (which can be found below) received a mixed response from the video game community.
It's important to note that this is still just a rumor and we have no idea what the real story is. Odds are, we may never know. But we'll have more soon.