How many players do you keep? If it is a little number like 1 or 2, then letting the new owners take their pick from the remaining players isn't that bad. However if it is a big keeper league, then I think you should have an expansion draft. Every old team can protect x number of players, x has to be less then the number of keepers. After a player is chosen off of an existing team, they can protect another player.
Just my $.02.
12 Team 1/2 PPR Dynasty Auction League.
QB: Cutler, Hill
RB: Turner,Slaton,Benson,Mendenhall,Harrison,Robinson, Greene
WR: CJ2, Fitz, Smith(NYG), Brunce, Morgan,Bryant