They'll finish out the last season of The Walking Dead with a handful of employees.
I'm kind of both surprised and not surprised. They seem to have been getting a lot of work with licenses but also, like many people have been complaining, their engine was reused so often and people were getting more and more tired of it (from what it seemed). They did announce a few months ago that they were going to be using a new engine soon, but it looks like they won't get the chance.
Update: US Gamer says the final episode for The Walking Dead Final Season is now cancelled and will not be finished. The skeleton crew left behind will be working on Minecraft Story Mode project for Netflix.
Also, here's a very telling image of their numbers
There is now a class-action lawsuit against Telltale.
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