Hired a friend and they walked out. What to do.

Created an account to ask this, as I’m not sure how to proceed with the situation. We run a small seasonal business, and while I’m not a fan of hiring friends, we hired a friend. He was a great fit for the job, seemingly had a great attitude and we made it clear that we prioritized the friendship, and if he ever wanted to step out because it was too much, just tell us and there would be no hard feelings. Let’s call our friend James. He worked ran our kitchen. He’s in his 20’s. James rarely showed up on time, maybe I can count on one hand him clocking in when his shift started. Typically 10 minutes late. I do all opening and closing duties for him, so all he has to do is show up to a fully stocked and ready to go kitchen, work his shift and go home. He gets an hour break daily, sometimes longer if it’s a hot day (2-3 hours). He works 5 days on 2 days off. When it’s busy I step in to help and only leave again when it’s slowed down and I confirm he’s all good. The last few weeks James has been incredibly miserable. Constantly saying “fuck this” “fuck me” “this is stupid” in front of the other staff and in earshot of the customers. Other comments were made by him that I had to speak with him about last week, I tried to have a productive conversation about how these comments were rude and offensive and asked him if he’d like to be done for the season, no hard feelings, if it was getting to be too much for him. I got a plethora of excuses for why he said what he said. And he didn’t mean it. And that he will “push through” until the season is done (a couple more weeks) and he left. I didn’t feel the conversation went poorly, but I also didn’t feel it went well. I told him I’m not a “push through for work” type of boss, if you need the time off you need the time off. But he said nothing. He came in for his next shift (late) and worked it until about 5 hours in, which is when he started making the comments above, to which I sent him home. I said “okay I think you can go home for the day, you can’t be speaking like that at work, we have talked about this” He said okay and left. Came in the next day in a decent mood. All was fine. The day after is when shit hit the fan. Myself and the other owner had an engagement we had to be at, we would be gone for 3-4 hours at most, and I overstaffed with completely confident team members so there would be no reason to worry. He had fully trained help in the kitchen, as well as two other staff in the building. I let him know I just needed him until we got back, and then he’d be free to have the rest of the day and he agreed that sounded good. When we came back to the premises, I was notified that he had walked out an hour previous, telling no one he was leaving. He just walked out. I messaged him and received no answer. My partner did the same, and didn’t get an answer. I worked the remainder of the day. Next day he didn’t show up for his shift, still no response when I inquired. He responded two hours later saying he was sore and wouldn’t be coming in. I let him know I was disappointed he felt he couldn’t communicate any of that with me and that I feel he showed how little respect he had for me and my partner. But to take care of himself and let me know how he gets on. He claims it’s not disrespectful to walk out and then not show up for a shift with zero communication. And that he’s sorry he handled it the way he did, but he didn’t disrespect us. Now I’m feeling the friendship is strained, and quite honestly I’m genuinely angry. I’m not sure how to proceed. Is this him quitting? Does he expect to go on like nothing happened? He has yet to respond to any other messages from us. BUT I do know he’s doing well because he has responded to mutual friends, as I was concerned about his mental health. Looking for any advice? I’ve already taken responsibility for all of his upcoming shifts, because he hasn’t responded to anything else. So technically I’ve got it covered, even though it’s going to create 14-16 hour work days for me until end of season and put a strain on my other staff. Do we just pretend nothing happened and give him an ROE saying end of season? Or do I put down he quit and screw him out of any employment insurance opportunities. I don’t feel right doing that, so I likely won’t, but I’m at a loss at what to do. Edit/Update. He is terminated. He’s spreading lies to mutual friends and those in the community. So in my opinion the friendship is also over. Feel I have been taken for a fool. I also had a team meeting this morning with the staff remaining for the season giving a formal apology, as my tolerating this attitude and these actions showed them disrespect for their hard work. They will each get a heftier year end bonus, and James will not be getting his. That’s the last time I will help out a friend with a job.