Sorry to hear about your struggles. The language you used ("wash her hands of the team") and the delayed timing of this revelation ("the problem we are running into now") suggest that this teacher didn't leave on good terms with the team. Without knowing the politics of the situation, perhaps someone can have a long chat with this teacher to find out what the issues really are and if there's any way to resolve them amicably?
Because the other step is legal or administrative as GeeTwo indicated and that's not likely going to end well if the two sides are fighting with each other.
Team 2706 started this year because the lead teacher of our previous team decided he needed a break from FRC due to all his other commitments. He too encouraged the students and parents to continue and start a new community based team, which we did. The difference is that he was very up front with us about the status of the tools and equipment - they were purchased when the team was run by the school, with money from sponsors that was technically written out to the school - therefore everything was the property of the school. We were lucky that one of our RoboRio control systems was purchased by a mentor and technically his own property. Beyond that, we ventured out on our own. But we've had all year to prepare in advance.
We partnered with our local library for meeting space during the pre-season, and a local community center will host us for build season. How do you build robots in a library? Well, quietly
We used the time mostly to train students in software, design, business, electrical controls mounted on a plywood board, and "hand tools only" fabrication of COTS kits like a Kit of Parts drive frame that we borrowed from another team.
We started from zero as far as parts and materials goes, but the unexpected plus side of being a community team seems to be that we have attracted a LOT of parent and university student mentors. Mentors have offered to donate or lend tools and materials of all kinds (including the aforementioned RoboRio), so we should have all the basics for build season. Do we have a mill or lathe like we did at the old high school shop? No. But we will get by without. No custom 6-CIM gearbox this year. But that's OK.
I hope your situation is resolved amicably. But I would, on the side, start asking "what will we do if we don't win this?" and think about alternate plans - could you borrow enough tools from your mentor base to get by this year?