He lost his tools and supplies in the settlement and has had to find a way to provide for his family by other means.
You really expect him to dip into whatever savings he has – and spend the time he has outside his new work – making good on those orders?
Do you know these for a fact, or just speculating?
Hopefully everyone on both sides of the debate can agree that it is wrong to leave paying customers with outstanding orders in the dark. Even in your outlined worst case scenario, an apologies email with some facts of their financial straits could go a long way in soothing customers' (IMO justified) grievances