Thousands of dollars is budget dust in litigation. It seems to me that individually these cases are too small to bother with. And collective too small for a class. And the life suck should not be underestimated. Ymmv.
If a corporation is involved, then yes litigation _can_ be expensive. But even then, not always. I successfully sued a fair-sized corporation (a chain of about 10 car dealerships) for about $2000 in small claims. The life suck wasn't bad, a few hours to go to the courthouse and file the paperwork, and 2 appearances in court because they managed to stall and have it not heard the first date. Well worth it for $2k.
Michael, afaik, is not a corporation. He also (apparently) doesn't have the cash to spend on a high dollar defense. So, litigation will not likely be that bad imho. Hell, this could be heard on one of those TV court shows, and then both parties would be paid for the appearance. In another case I was contacted by "Judge Joe Brown" and they tried to talk me into it. Not sure if the defendant called them or what, but I declined.
I don't know how many people were involved, but between 10 and 20 is enough for a class. At least $30,000 dollars is involved.
Also, also, if he is in the process of quietly filing bankruptcy, for any chance at all of getting any money, the claim needs to be made before it is final.
But most certainly, afaik none of us are qualified to give legal advice. Those involved really need to at least talk to an attorney, even if the course of action isn't going to court. A phone call is free, and a 20-minute consult is cheap.