Tbh I think they were smart to incorporate. It might have drawn a larger target on their backs (though patreon's target probably dwarfed it), but it also meant that individually they were financially protected from Nintendo. They'll probably still have to pay Nintendo whatever their corporation currently has even if they declare bankruptcy, but at least the devs aren't having their wages garnished until the end of time.

If they do attempt to declare bankruptcy, let's hope Nintendo doesn't try and sue them again to pierce the corporate veil.