Dispute with builder / Getting deposit back

We got a quote for boarding out and putting plaster board walls and ceilings in our loft and putting a velux window in so we could get some more storage space / office in the roof.

The builder we asked to quote had recently done our neighbour's loft conversion and they recommended him.

The quote was really (too, I guess) competitive and we paid him a £1,500 deposit via bank transfer after being emailed three times in a week with various sob stories about buying equipment and booking scaffolding.

He gave us a start date and then didn't show up for two weeks putting us off each day after I called him - saying he'd be here the next.

We threatened him with pulling out and demanding our money back and within two days he arranged for some scaffolding to go up but then spent another week and a half putting the job off on a daily basis.

At this point we called him and said he had to give us our money back as he was now just about a month late starting and he said he would give us back everything but the money for the scaffolding.

We grudgingly agreed and he said he would get in touch with the scaffolding firm the next day.

Two days later, the scaffolding company hadn't heard from him and I'd not got my money back. So I texted him and he replied back saying the money transfer would be setup the next Thursday (last week). On Thursday evening I checked and the money wasn't there so I called at this point things got weird and he told me the payment takes 7 days and if I didn't stop calling him or texting him he would call his solicitor.

Clearly 7 days to make a payment isn't normal banking practice and low and behold nothing is in my account today.

So now I am sitting here £1,500 down with a load of scaffolding in front of my house contemplating what my next move is.

Do I have any rights? Clearly I paid a deposit and they aren't generally refundable but if the guys hasn't shown up for four weeks and agreed via text he will refund me £1,200 and has banned me from contacting him - I am running out of ideas and patience.

In a previous email the builder made it clear he thinks he is being reasonable and that I am cancelling the work. Can I make a money claim for this (is this the same as small claims court?) and would the court see me as the unreasonable party?

If it makes a difference the guy is set up as a limited company and it looks like he liquidated a previous company last October owing 50k to HMRC and local firms. I am guessing he won't have many assets. How can the system allow someone to setup up a new company so quickly afterwards and apparently start doing more dodgy dealings within months!

Wondered if anyone has any advice. Or am I out of luck!

Footnote!
We've now got two more builders into quote for the job (both friends of friends) and neither will touch the job without structural engineer reports and building control involved (neither of which the first guy was going to get). So on the one hand I'm pleased the original builder was a total no-show as the consensus of the other builders is that either he would have done the job and cut corners and probably left us with a unsafe house or got halfway through and demanded more cash.