I'm really sorry to hear about your situation. That does sound frightening and totally infuriating. I thought I would write something about how I could relate to a career loss but when I see how this affects your entire family in such a direct way, I am simply shocked.
It reminds of me of everything I hated about academia. I was one of those students who was expected to come back to my department as faculty one day and a few of my friends have gone that route and teach at colleges here in BC. The internal politics and butt-licking discouraged me enough to want to join the military. I thought I would find the last vestiges of honour in the forces, a place where MERIT counted for more than sucking up to your boss. Ooops, that turned out to be one of those "out of the frying pan and into the fire" scenarios.
I feel badly for your kids especially, since the last thing they need as they near the end of their studies is the kind of fear and uncertainty a development like this brings.
Hopefully, this will become one of those things that you and your family will all look back on some day and realize that these events actually turned out to be a good thing in the end? I feel like an idiot saying something like this to someone who is going through such challenges but I really hope this becomes a catalyst for change that leads to great things.
It really does suck and I'm sorry it's happening to you and your family.
Chris