Screwed by incubator, what do I do with my dead company?

Hi everyone,

I was part of a (non-YC) incubator in the Bay Area. We were given a small amount of money equity-free and we were directed to use the incubator's high-profile Silicon Valley attorney in forming our corporation. The attorney and founder of the incubator tried to throw out our CEO and replace them with an associate who worked for one of their VC sponsors. This ended up being a pretty awful experience, and we left the incubator early.

Given this experience, the founders have agreed that this company is not going anywhere but we're unsure what to do. We're obviously crushed, but we have plenty of other opportunities, so we're okay.

But to complicate it further, the attorney is now demanding payment for their services which total about two-thirds of all of the incubator money we even got (which has already been spent), and the attorney's firm has a negligible amount of equity in the company. Nobody other than the founders has any equity, and we didn't raise any capital.

So, HN, what have you done with your dead startups, especially after they've been legally formed as a Delaware C-corp? And, how do make sure the ghost of your startup doesn't haunt you for years to come?

Thanks!