Not a lawyer, but here is how I understand it.
CBE privately and publicly announced that they were withdrawing from their distribution contract with Lace Mamba as Lace Mamba had violated the terms set out by said contract (the whole not paying devs thing). This was after repeated letters from the lawyer CBE hired, among other attempts at communication.
Obviously, Lace Mamba is indirectly claiming that still have the rights to distribute the game. According to their contract, they probably do, except this is the contract that they themselves breached. I don't know what happens legally, but when the other party is violating the terms set out that impact them, but forcefully binding you to the terms that affect you, that other party is a giant slice of asshole.
Realistically, CBE should sue. But that's very expensive and time consuming for a team as small as CBE. I just really hate to see shady companies punch around small companies, knowing that lawyering up would probably bankrupt them.
Yes, Lace Mamba are apparently acting like bullies, which is not acceptable morally or legally, but is unfortunately something that bigger companies can often get away with when dealing with small ones.
I kind of wish there was the equivalent of of the free representation poor people can get in criminal cases for small companies who can't pay lawyer fees.
I can't imagine why Lace Mamba thinks they can get away with this, however. They're just not big enough that there aren't plenty of other options for small developers, and acting this badly with business partners will just mean nobody will be willing to work with them before long. Reputation counts for a great deal in business after all.
Anyway, I'm on the fence about this. On the one hand, I really
don't want to support an asshole publisher, on the other hand I only want the bundle for Lucius and KB, so it's not like I'd be giving Lace Mamba money I should be giving to the devs.