Not sure if this is an option but..have you thought about selling the "dead" team? Someone may want to take it, and if so problem solved. Seen it happen in a hockey league I did.
If not, then plan B is this. Play the team as the commish fielding the most competitive team humanly possible with what it has. Do not allow other teams to trade with this team. If this team finishes in the money, say 2nd place, skip that team and the 3rd place team wins 2nd place money, etc..