If you had set out to create this situation on purpose that would be screwing people over, now all that there is left to do is to shut down as orderly as you can and to have everybody absorb an appropriate part of the loss.
Everyone takes risks doing people. Inability to pay is one. Bad people is another. The first is usually rarer and more manageable. The second is not so bad. You can avoid being in the second category.
*Mixergy interviewed a bankrupcy lawyer a while ago. Maybe there's something useful for you in it. One useful thing I remembered: Discounted debt is usually taxable. Be careful you are not caught off guard. http://mixergy.com/russell-demott-interview/