Folding a tabled all-in hand @Bay101

[SumZero]

With people posting weird situations for rules judgements this happened at my table in a $120 spread limit (basically nl) tournament at Bay 101 (pf betting, stack sizes, and some exact cards might be slightly wrong, interesting rules part is right).

Seat 5 is the button with 200-400 blinds. Folded to Seat 1 who goes all-in for ~2500. Folded to seat 7 (BB) who has seat 1 covered and calls the all-in. Players table their hands in front of them and seat 1 has 8[img]/images/graemlins/diamond.gif[/img] 8[img]/images/graemlins/spade.gif[/img]. Seat 7 has A[img]/images/graemlins/diamond.gif[/img] A[img]/images/graemlins/heart.gif[/img]. Seat 7 has counted out the right amount of chips and dealer has the correct pot in front of them and deals the flop which is 2[img]/images/graemlins/spade.gif[/img] T[img]/images/graemlins/heart.gif[/img] Q[img]/images/graemlins/spade.gif[/img]. Dealer does brief pause, taps the table, burns and turns the A[img]/images/graemlins/spade.gif[/img]. The order of events here is close and may be important but goes: Seat 1 thinks he's drawing dead and picks up his tabled hand and folds it in the muck and starts to get up from the table while dealer does his normal brief pause, then after the fold taps the table, burns and rivers the 4[img]/images/graemlins/spade.gif[/img]. Seat 1 at this point in time has no hand. But yet if seat 1 still had the hand he'd tabled all-in he would have hit the flush and won the hand.

What is the correct ruling?

What happened at the time (and I don't know if this was correct or not) was:

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Dealer awarded the pot to seat 7. Some of the table commeneted to seat 1 that he had the flush and seat 1 complained. Dealer immediately called the floor and explained the situation. Floor asked to be sure that the player folded his hand before the river card arrived and upon getting that confirmed ruled that seat 7 is entitled to the pot that seat 1 had abbandoned his hand.

Oh, and in full disclosure I was seat 7, and didn't at any point demand the pot but was more than happy to accept it (I still busted out before the money though - karma maybe).
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