From diving in, it looks like the contract backing a smart wallet implementation had a vulnerability/bug/design flaw allowing an arbitrary actor to kill it[0]. It looks like these contracts are treated as a shared library so the contract being killed means any wallet depending on it is bricked.
The solution here seems to be a hard fork of Ethereum to allow revival of that problem contract. This seems unpalatable as, well, avoiding extensive human intervention is a key idea in cryptocoins.
Disclaimer: I got off the cryptocoin train awhile back so if I've mistaken anything, please point it out.