Game Informer’s Blake Hester published a detailed report all about the Bully 2 that might have been and what led to the studio developing the sequel’s downfall. In short, Rockstar New England was pulled in multiple directions to the point where Bully 2 was no longer the focus of the developers who worked there.
Rockstar New England, which was purchased by Rockstar when the former was Mad Doc Software and was responsible for the next-gen remaster of the first Bully at the time, had ambitious plans for the sequel, a bigger, more characterized game that could stand alongside L.A. Noire and Grand Theft Auto 4 as a grand tentpole release worthy of the Rockstar name.
It was not to be, though, as the studio got pulled in multiple directions, called on to assist with projects like Red Dead Redemption and Max Payne 3 and immersed in the crunch culture that came with working on those games. This caused many developers at Rockstar New England to leave, but the studio was also hit with layoffs, ensuring that Bully 2 wouldn’t see the light of day. It’s a shame, too, because the game was “six to eight hours playable”, though not shippable at that point.