I agree with you, finding jobs for ~50 of the 120 employees is better than firing 110 of them.
The investors aren't getting their money back no matter what the cap table looks like now. Pebble went bankrupt. The founders are also walking away with nothing. No money from selling the company but also no debt - that's the benefit of limited liability.
I thought the company sold assets to FitBit. I saw a $40m number floating around. While that might be golden handcuffs for employees, I would typically expect to see the investors take some cash out of this.
If there was $40m, it's likely the founder got _something_, even if it's just 200k. There has to be financial incentive for him not to burn it to the ground, and the VCs probably don't want to get a founder-unfriendly reputation over a "small" chunk of cash.
The investors aren't getting their money back no matter what the cap table looks like now. Pebble went bankrupt. The founders are also walking away with nothing. No money from selling the company but also no debt - that's the benefit of limited liability.