In short Midway needed cash sold assets to WB, WB decided to can the game and wrote it off as a loss. Shame, but that's the way it goes sometimes.
You should look up Rodea the Sky Soldier sometime, it's 100% done and unreleased, a good Yuji Naka Wii game unplayed and unloved since the company who paid for it won't release it since it's on Wii and that means low sales. Stupid reason no?