Kindly Advise Me On The Behaviour Of My Managing Director

I am a senior manager in the company I work for at the moment (like second in control).
Recently, we had a client who rejected our products due to obvious production and installation defects, and demanded a refund of his money, which is ok. This problem came up due to several factors ranging from non-provision of necessary work tools, poor work by installers, demotivated teams, among others. And a meeting was called by the MD, who normally is not on ground.

Since the MD rants a lot, we (the managers) expected a sack or even preferred a sack or resign, but he insisted that on no account must anyone of us resign until the client's issue and other lingering issues are closed out, otherwise he would arrest us. During this period, none of us is expecting to receive salaries, the period will likely be up to three months (Jan. to Mar. 2017).
To everyone that can give me some pieces of advice, do you think the MD has the right to insist that none can resign, even apart from the new issue of products rejection, it is always insults and abuses? Also, kindly advise me on what you think I should do now.
Thank you in anticipation of your responses.

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