6 years ago I started a company with a cofounder (Person A). After 2 years of work, we essentially mothballed the company. Person A moved away, got married, and has been working on his own startup for the past 4 years.
Since we took some friends and family money, I felt obligated to repay what I could by turning the company into something valuable. I worked small jobs to pay my basic bills but worked on the company in my spare time. After about 2 years of working on the business part time (you know, 60 hours a week while holding down other, paying jobs), I found another cofounder (Person B) and returned my full time (ie unpaid) effort to the startup for the following 2 years.
We are now at the point where we need to do a recap (ie dilution) to provide equity to Person B, who has been working similarly unpaid for 2 years. Upon mentioning this to Person A, his position is that everyone should be diluted equally, including me, the founder who could have easily bankrupted the company but felt morally obligated that initial collaborators, including Person A, would earn some return.
Our lawyers think this is a crazy proposition since Person A is getting a massive windfall at my expense. The lawyers’ position is that dilution is a fact of life, and when you’re no longer investing time into the company at the expense of other opportunities you cannot claim the same benefits as someone who has.
I wanted to post this question here for some objective opinions.