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I'd say most likely he spun one or more rod bearings. Sr's like doing that, so if the oil was low that probably exacerbated the problem even more. Why did you loan him the car? Clearly you had something else to drive, so why give him the 240 with an engine swap? Did you tell him to check the oil every few days, and was he familiar enough with cars in general to spot a small issue before it turned into a bigger problem? If not, then it's hard to say what to do. If so, then he should man up and pay for the damages.
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