It sounds like they literally can't refund people because the company completely ran out of money and is gonna be liquidated. Sucky situation for all parties involved.
Or a law stating that in the case fair refunds can not be provided that the software needed for running the hardware becomes public domain and is published and released on a git maintained by the library of Congress.
The law would probably make sure customers whose products are being bricked are counted as creditors. Ideally after employees (unpaid wages) and before investors. They may not get full refunds, but they'll be entitled to something if it's possible.
Yeah, likely true without some sort of legislation.
Well at least there's a business opportunity for someone to reanimate these things and use them to push gacha games and energy drinks on the innocent children they've bonded with.
What they probably can do is issue an update that lets owners point it at third-party servers, and publish the API. They might even be able to publish the source code, though there's a chance they don't own all of it.