Well if the partner was supposed to provide funding or capital to the company but failed to, then his ownership in the company is called into question. That partner failed to fulfill his contract to the company and doesn't have a legal right to the shares in the first place.

Realistically it depends ona number of factors. Is there anything in the company worth retaining? Ex a signed contract or sale agreement under the current company. If so, then you should fight to keep the company. Lawyer up and have him make a choice either pay more and lose his unearned share of the company or simply relinquish his unsubstaniated position.

If the company has nothing, then just start fresh.