LiveDrive could have gotten massive goodwill if they did this, even if they offered to transition the data to another service.
This complete loss of information is brutal and I would stay away from LiveDrive as they don't know how to properly handle important relationships.
The situation should be explained in detail and an open letter by LiveDrive stating what is going wrong with Backify. This would have informed users of the situation and of Backify's actions. I believe that the data loss could have been avoided even if Backify's owners were acting fraudulently.