Investor is suing for breach of contract (the unpaid convertible note), trying to "pierce the corporate veil" by claiming alter-ego.
In the end we'll "win" this, but that will not save us from having to spend $50-$150k in lawyers to resolve it (if this goes all the way to trial, it's about 18-24 months of paying lawyers which cost about $500/hr, at about 10hrs/month).
Best of luck. I've been through something similar and know how stressful it can be. When closing my last startup, we purchased a D&O tail policy to cover cases like this. It's a good way to buy a little peace of mind.
In the end we'll "win" this, but that will not save us from having to spend $50-$150k in lawyers to resolve it (if this goes all the way to trial, it's about 18-24 months of paying lawyers which cost about $500/hr, at about 10hrs/month).