How is repentance achieved by restoring people's rights to them for someone who has disgraced a Muslim, if doing so would complicate matters further?

The aforementioned Hadith, with the exact wording, has not been found in the collections of Sunnah. However, there are Hadiths that encourage covering Muslims' faults and warn against seeking out their private matters and backbiting them, such as: "Whoever covers a Muslim (fault), Allah will cover him on the Day of Resurrection," and "O you who have embraced Islam with their tongues but faith has not reached their hearts, do not harm Muslims, nor mock them, nor seek out their private matters. For whoever seeks out the private matters of his Muslim brother, Allah will seek out his private matters, and whoever Allah seeks out his private matters, He will expose him, even if he is in the privacy of his home." And "Do not harm Allah's servants, nor mock them, nor seek out their private matters. For whoever seeks out the private matters of his Muslim brother, Allah will seek out his private matters, until He exposes him in his own house." And one must seek absolution from the wronged party in this world.