I have done in-depth research on this company, it has a great vision. However, I have heard or read about issues in the integrity of the founder. This is my only opportunity to become a co-founder, as the company is the only one of its kind in my area, in which my skills match the needs of the company.
The biggest question you'll have to answer at this point is whether you and the founder can get along. You've already highlighted issues with the founder but does this bother you? Are both your goals aligned and do your values agree with him/her?
In a previous experience, I brought someone on whom I didn't know much about - only that his skills matched what I was looking for. However, only after a few months, he decided to leave as he didn't agree with the new direction we were taking. Yet, there was never any opposition when the idea was first brought up.
The team is one of the most critical things at the beginning of every startup. You'll want to be in an environment where everyone is open, honest and can execute to the best of their ability.
I don't believe that this is your only opportunity - there are plenty of opportunities all around to those who seek it.
I've been involved with a couple of chapter 7s and chapter 11. There is not enough money in the world to make me consider touching one. Just off the top of my head:
1. If a company's already run into bankruptcy then you're not joining as a co-founder, no matter what anyone says.
2. Bankruptcy makes enemies. Join as a C-level and you inherit those enemies.
3. The debts discharged in bankruptcy are only the most obvious 'debts' owed by this entity. Technical debt, management debt, favors owed ... all this stuff becomes your problem the minute you sign on.
4. Everyone still associated with this venture, formally or informally is trying to recover sunk cost. Startup failures, at the end, are a swirling mass of schemes and every individual player sees himself and his scheme as the center of the company's resurgence.
5. The more compelling the original vision of the company, the worse all the other problems it has will be. Why? The vision is what keeps the swirling mass of recovery schemes going. So your in-depth research validating the original vision is actually a HUGE red flag because it guarantees that all the other players trying to make something of this mess will never give up.
My advice? Find the nugget of good this mess will spawn and attach yourself to that. Start with the people. Who are the quality people here, the ones who've done the right thing in difficult circumstances. Cross off the list anyone who's still participating in the recovery schemes. The smart ones cut their losses cleanly. Find out where they're going and follow them.
move on. Other opportunities will come. and don't look back either