While I do feel sorry for the small traders that may have lost money in this, at the end of the day, when you decide to set up your own business, you accept that there are risks attached. You also accept that the only person who has a responsibility towards your business is you, it's also down to you to research any offer made to you and make your desision on that research, and if it goes wrong, it's down to you.
I can't see how these traders imagine that the Council has any liability towards them - if people decide not to go to a place, they won't go and no-one can force them to.