[AJ007]

A lot of opinions and subjectivity in the comments here.

This was a business to business transaction. What it said in the contract, and the jurisdiction that the contract fell under are about all that matter. Anyone in this business knows the grey area work for hire programming contracts fall under. (Depending on some legal opinions if it was "work-for-hire" it may be completely void as work-for-hire doesn't cover programming except under narrow cases.)

Here one party has publicly received a large sum of money. Lawyers will look favorably on that upon taking cases. The programmers who feel they were wronged can then decide, should we wait a while? Will the company get more funding or will they go out of business?

A worst case scenario would be that the original contract programmers are entitled to a large percentage of equity in this company. Whether or not the code is used today may not even matter.

Another lesson here is to be careful who you work with. Make sure they can accomplish what you expect. It should be damn evident pretty quick when a developer is producing poor code (if it isn't, you shouldn't be in tech.) If you bake defaulting in to your business model, be careful. Individuals and small businesses remember getting screwed far longer than faceless corporations who will just sell your debt to a collections agency.