From someone who has been through "similar" experiences: (Most entrepreneurs/founders dread this part of ruining a company... its a black-hole for time and $$,

From someone who has been through "similar" experiences: (Most entrepreneurs/founders dread this part of ruining a company... its a black-hole for time and $$, but an integral part.) Talk to an EXPERIENCED lawyer. Experience matters here- Make sure they have worked on similar cases before. If you are doing your due diligence right, it will take some time to find a good lawyer. So, I would suggest starting on finding a good law-firm (w/ history representing clients like you) ASAP. Try to get free consultations and take the advise you get during these meetings with a "pinch of salt" There are many startup friendly law-firms that offer deferred payments or partial payments with stock compensation. Try to find one in/around your area. Consult with at least 2-3 law-firms before you sign a retainer with the one you like. Don't be afraid. Fear can be crippling. Pick your battles and live to fight another day. You will need to win many battles before you can win the "war"... and you are going into "war" right now. Make an informed decision. There is a lot of "noise" on the internet and it is easy to get influenced by "bad advise" that seem good at first...So, it is important you find a good place for your information (an experienced law-firm) You probably don't need more than 5-6 hours with a good lawyer to at least get an idea of how bad the situation really is. It is easy to think that things are worse than they are. Once you have a good handle on where you stand, you can then make the decision to sue, counter-sue, defend or drop-it and move on. Keep in mind- the process to resolution might take months and sometimes even years! These things take time... Good luck!