Friend 2's child bullied Friend 1's child.
Friend 2 showed no remorse and positioned Friend 1 as being in the wrong for telling everyone that her child had been bullied and she was having to sort out a change of schools. Did it not occur to Friends 3, 4 and 5 at that point to reach out to Friend 1 privately and ask if she was OK?
Friends 3, 4 and 5 just want to socialise. That is their only aim. It's not convenient to them when Friends 1 or 2 are upset. They are looking for evidence Friend 1 and/or her child made stuff up, so they brush this all under the carpet for an easy life. That's their response: not to sympathise, but to avoid/ignore.
Friend 1 has other friends. Thankfully. Because Friends 2, 3, 4 and 5 are not friends to her. You're all treating her poorly.
Friend 2 doesn't care if her actions hurt other people. The correct response is, 'I'm really sorry, I can't explain why my child did that. I'm going to handle this, and I hope you know I do not think any of this behaviour is acceptable. I understand if you need me to step back from the group for a while, but I really don't want us to permanently fall out over our children, as your friendship means the world to me.'
The correct response is not 'OMG, ur so nasty, y r u telling ppl that my child is bully?? UR a bully!'
The fact that Friends 3, 4 and 5 have stood back does not mean they are neutral. It means they have sided with Friend 2 and think it's perfectly acceptable to treat your so-called friends like shit.
At some point, either Friend 3, 4 or 5 will have something go wrong for them, and will wonder why the rest of the group is not supporting them. Then they'll remember this.
The group is dead. You all killed it.
I'd leave the group because you make poor decisions together, and the other people are not making you your best self. Reflect on how you handled all of this, learn from it, and make new friends. People who support you, who you support, people who make you want to be accountable. This group is toxic and honestly, you'd all be better for making new, different connections.