We've had 11 teams before and then moved up to 12 the following year so I think we've handled these similar issue:
1. If you have to stay with 11 teams, not a big deal. Even in a h2h league, you will just have 1 team with a BYE every week. Not the idea situation but certainly not the end of the world either. Then put anyone that was on that team and put them into the available pool for the auction/draft.
2. If you replace this team, you can give him the choice of either keeping the existing team (which I'm guessing won't happen) or have an expansion draft from the other 11 teams. In our system we have a max of 10 keepers per team so everyone protects 10 players and the new teams starts picking players. When a team has a player taken, he can then protect 5 more players. The expansion team must draft at least 5 players (the min number of keepers), I'm not sure what the max is off the top of my head. This expansion team usually gets some decent keepers but not so good that he has a big advantage over pre-existing teams.