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Do right by the contractors. Nothing you do will somehow make him behave well. Pissing off a whole lot of other people by screwing them financially out of fear

Do right by the contractors. Nothing you do will somehow make him behave well. Pissing off a whole lot of other people by screwing them financially out of fear of his reprisal means now you have more enemies and a black mark against your character on top of a nutcase hounding you who will do insane, abusive garbage for irrational reasons. Any protection you have from him lies in not screwing others in the name of covering your ass here. He's going to keep trying to hurt you no matter what you do. Others will protect you or not to some degree largely based on your behavior.

akg_67 3y ago
+1 Do right by the contractors by paying them properly and timely. Talk to angel investor about dissolving the company, get legal consultation and returning remaining funds and IP to the investor. Take a break for a while. Setup new startup, approach previous angel investor and contractors again, and take another swing. The lesson learnt should be not to take just anyone "officially" as cofounder unless there is some sort of validation by others. Next time, have your investor and contractors interview such a person, ask common connections, bring that person onboard as contractor first.