First of all BE VERY CAREFUL about exiting investors while bringing new ones on. You cannot give investors money back out of proceeds raised from new investors. It's illegal (called Ponzi).

This is a VERY tough scenario since you are dealing with two substantial issues - 1) building (or rebuilding) a business; and 2) retiring investors.

If the business is in fact "ruined" then you need to first decide if bringing new investors into that situation is a wise decision. You could be opening yourself up to legal problems.

Investors invest in projects when they can 1) make money; 2) connect with the business; 3) add value; 4) believe in management.

Unfortunately, having "previous investors" (especially bad ones) is like coming into a relationship with baggage. Most savvy investors will not want to participate.

Advice: try to retire the investors BEFORE talking to new investors. Rebuild the business model and wait a few months before going after new investment. Showing that type of resilience and passion for the business could play in your favor and show new investors that you are someone who can overcome adversity to achieve success.

So how do you "retire" investors? Convert the investment to debt if possible. If not, offer to sell the business to one of the investors. Do not sign a non-compete and start a new business. Also, depending on your stock purchase agreement and any anti-dilution clauses you could issue new stock and dilute everyone's shares to where the old investors shares are minimal (could have legal repercussions though so be careful).

If you really feel that the business is ruined, you will not be able to attract new investors. The best thing to do is to walk-away.