Very unfortunate. Sloppy work and a bad businessman as well. NEVER complain to a client about your inability to price you own work properly and as a result lost money on those jobs. Personally, based on the red flags, I'd push this to resolution quickly. Sounds like a future bankruptcy candidate to me. Depending on the circumstances, I don't know if this is the guy you want standing behind your tank. Hope it is resolved to your satisfaction.