Believe it or not, I just read this whole thread. I am very sorry to admit that.
Product delays for distributors happen all of the time. If their business was running that tight on margins that one distributor put them out of business, that is their fault.
Given their ethics and how this was handled, I am not even sure the games would have made it to the rightful owners even if Jack had made them on time. It sounds to me that Jack is doing the right thing and making the machines he was paid for. In my mind he really doesn't have any further obligation.
It is just sad that this happened at all. I really am sorry for you folks.
As I write this you should all know that I am at risk of bad ethics as well. Jack has my money for both WoZ and TH. If he goes under, I am screwed. I couldn't expect his suppliers of cabinets, boards and other parts to pay me even if they were already paid by Jack. It just doesn't work that way in the U.S. I understand this risk and I am ok with it. Others may not. If so, they should stay away from business models like this. The best model is pay and receive the same day. But in the case of a startup, it isn't practical. So here we all are........sorry again.