He's still liable for the debts (or his company is) even if the firm under which he incurred them ceases trading. Getting payment is another matter though.
Maybe you could send some guys round with baseball bats (only kidding...,,)
Not sure about interest (unless you included the possibility of it in your contract). There was a government proposal (and I don't know if it ever got further than that) to make payment of interest on late payments (particularly by large firms to small) mandatory
I'd stop working for him - or at least demand payment up front. You may never see the original money, but you won't lose any more.