Oh Celia - I cannot believe this has happened - how absolutely dreadful. Well, I feel compensation should be in the form of the cost of the kit, an estimate of roughly how long it took you to stitch it plus a 'distress' value for it having been lost. I would make this last bit a really hefty sum as it may just encourage them to have another really good look round to find it!
Let's face it at the end of the day nothing will compensate really. I would also take the trouble to question them more closely - is it possible that they do still have it but it's just that they've done something to mess it up and don't like to own up; it could be to you that it is still salvageable in some way.
As a word of advice I would add take the time to kind of 'step back' for a minute to think things through Sometimes when we are in situations like this we can act rashly and then wish afterwards when we've calmed down that we had approached things in a different way.
Whatever happens I'm quite sure you will have the commiserations and sympathy of all the Guild members behind you; people do care.