For information, I have decided against funding a loan to support the payback of the creditors here. I believed that it would have been useful for the community to have this mess cleaned up, but my assessment of the risk to my funds (based on information released and not provided) would be too high.
Ouch that is bad news. I still hope that everything can be cleared up, I myself never used his service but he seems to be cleaning this up to the best of his ability, so I would be sad to see it taken to small claims.