If I were in your case and what I heard was exactly what happened I would:

1) File for Divorce on irreconsilable differences. As for assets that's up to your and him, but PLEASE PLEASE PLEASE don't use the kids as a weapon... ...please.

2) Fire your husband from the company and anyone else who worked for your B-I-L knowingly.

3) Obtain a stop work court injunction for the brother in law's business for harming your company using insider information and company assets.

4) Sue the brother in law for every penny he earned as competition while working for you. Depending on the industry and the non-compete you might be able to get him for everything, but it's unlikely.

5) Accept that everyone you just fired, divorced and sued will hate you and speak badly about you. Whenever you are confronted regarding the situation all clients and associates should hear something like: "That is/was an ugly situation... 'I'm currenty working through it with them and the courts (or soon 'I'm glad it's over') and I want things to be positive moving forward. It wouldn't be right for me to say much as it reflects poorly on some people."

6) Accept that you will probably have a long term competitor in your ex-husband and brother-in-law who will take forever and a day to pay you back. Every time you take work out of their hands (through healthy competition) just grin and think of it as one more bit of revenge for what they put you through.