Can you suggest he goes on garden leave for a couple of weeks with the message that after that, his performance will be monitored and he will have weekly meetings to discuss. That you understand his difficulties, but the business has to function and he needs to carry out his role, if he can't then you'll have to let him go.
I say this from personal experience. I was a PA to a CEO, head honcho, very expecting that everything was done exactly and immediately. I suffered a miscarriage at the same time as my now XH left me for the OW. I thought work was my solution to distracting myself from the emotional pain.
Anyway, CEO called me into his office and told me he was taking me to lunch. This never, ever happened before and he had loads of family working in the firm, too. He was a tough bastard, everyone was scared of him. I wasn't.
We went for lunch and he very gently and kindly said that my standard of work had dropped and was unsatisfactory. He understood I was going through a difficult time and, as such, he was putting me on garden leave for two weeks, full pay. After that, I could return firing on all cylinders or he would have to let me go. I respected him even more after that.
I finished the day, had the two weeks off, then came back with my game face on and knocked the ball out of the park, as they say. I never had another 'lunch' and I stayed for several years until I remarried and left for maternity. The CEO retired during that time and I took over as PA for the MD and had a glowing reference.
I think you're going to have to be like this. Kind but firm. At the end of the day, your business is first and foremost and has to function. You have staff relying on it for their livelihoods. You can't let one person drag it down, whatever the reason.