A new entity should only run you a few hundred dollars through Clerky or similar. Your investor ought to be willing to cough that up, or you can probably put together a pitch deck (freshly inked licensing deal in hand) to attract a new investor in the new entity.
Your terms of licensure would not be strictly monetary, either. Make them $1 plus X percent of new company revenues over the next three years. Even if that X is substantial it's mostly going in and out of the same pocket.
I suppose if you wanted to fold the old entity up now, you could, but murky ownership of IP and assets could be a millstone around a new company's neck in the form of legal exposure from the CTO ("they cheated me out of my equity!"). Better the old entity goes out with a whimper, rather than a bang.