I'd be the same as you.If my so-called best mates business was going under I'd try and help but would I duck be promoting her. People will lose money eventually so he should just keep out of it instead of kissing her arse.
1.The damage is done.
2. He's made it worse by telling everyone that was oblivious to the situation.
3. I wouldn't want my name associated with her brand now so I'd be my distance.