The power to seize vehicles from uninsured drivers is conferred on the police by Section 165A of the Road Traffic Act 1988, as amended by Section 152 of the Serious Organised Crime and Police Act 2005.
Unfortunately, simple reference to the relevant legislation doesn't make the post-seizure options clear. This is because the SOC&P Act is 'enabling' legislation which gives the Secretary of State the powers to lay down the precise rules. (i.e. the actual rules aren't in the Act).
However, as I read several web page references, a driver has 14 days to produce a valid insurance document. Also, as I read it, this document doesn't have to cover the date on which the driver was stopped and the vehicle was seized. This is because the seizure (and possible crushing) of the vehicle isn't the actual penalty for the offence. That will be determined by a court, at a later date, when the driver is prosecuted.
Also as I read it, the driver will have to pay �105, plus �15 per day for storage, before he can collect his vehicle. If he doesn't 'pay and collect' before the the 14 days are up, his vehicle will be disposed of. (If that follows the same rules as for non-taxed vehicles, low value vehicles are crushed while higher value vehicles are sold at auction with the money being retained by the authorities).
So, it would seem that your son's friend needs to pay for an insurance policy. Then he needs to pay to get his bike back. Then he'll need some more money to pay the fine which will be imposed upon him by a court at a later date.
Chris