Horrible news, and much too common.
You can try a very uphill battle in the bankruptcy court but your chances of prevailing are very small, and a victory is that the debt is "not dischargeable", not that you collect money.
The surest solution is the irrevocable letter of credit. My successful clients charge 50% at placing the order and 50% for shipping. "Payment against documents is very rarely used any more.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
I would immediately consult with an Attorney that specializes in debt collections and contract enforcement. We have an attorney with our firm that does precisely that. We are located in Orange County and throughout California. Give me a call and I would be happy to point you in the right direction and introduce you to my colleague.
Hire an attorney and file in bankruptcy court. Good luck.
This reply is offered for educational purpose only. You should seek the advice of an attorney. The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than an educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the undisclosed individual asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of New York. Responses are based solely on New York Law unless stated otherwise. Pursuant to Internal Revenue Service guidance, be advised that any federal tax advice contained in this written or electronic communication is not intended or written to be used and it cannot be used by any person or entity for the purpose of (i) avoiding any tax penalties that may be imposed by the Internal Revenue Service or any other U.S. Federal taxing authority or agency or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.