Honestly its better if he sells the whole operation. Im sure he could still get a decent amount for the equipment he has.
Trying to continue the operation if it is practically impossible will be an exercise in futility. Even if he has to buy the equipment personally and quarantine all funds from doing so.
Who do you think has the capital to buy outright?
He should sell the equipment off and send it to bondholders. Pay out the bonds is what I am saying. Then he can start fresh with his reputation intact.
Or do you defend him changing a contract after he signed it to the detriment of the other party? Think carefully about how you answer this.