We had a similar situation a few years back.
Our DD started boarding at a school at the start of the Spring term. Then 3 weeks after starting they called to tell us they would be closing the boarding hous at theend of the summer term and becoming a day only school. The fact we lived just over an hour from the school meant that DD becoming a day pupil was not an option.
The school were actually very good and said they understood if we wanted to withdraw asap. We didnt as we had no where else to go. We spent the nex 3 months furtively searching for an alternative school that suited our DDs needs.
However, the school did not offer back our £500 depoit we had paid when accepting the place (literally 1 month before they dropped their bombshell).
Our contract said the deposit was refundable ONLY if pupil completed their time at the school which would be the end of year 8. Obviously, our DD was never going to get to year 8 because they were closing the boarding house and leaving us (and others) no option than to withdraw our child. In the end I asked for our deposit back which they did eventually return to us without too much quibble.
I was very annoyed as we too had spent a fortune on ALOT (boarders generally need lots) of school uniform. I regained a small amount of money back by selling it in the school secondhand uniform shop - an option for us because the school was remaining open as a day school.
I would suggest you speak to the school asap about your plans to remove the children as soon as you have found an alternative school. They may or may not be very helpful regarding a terms notice of fees but you can but ask. I would also look into getting back your deposit as well.
I would also suggest you dont waste 5 minutes finding an alternative school - as others will be looking too, squeezing any spare spaces in both the state and private sector. Being that it is so recently your DC started at their new school, were there any other schools that you looked at recently and liked? Are they worth reconsidering now?
For what its worth for us - the move although horribly upsetting and stressful at the time meant we found what we think is the best school in the world for our DC. We had originally dismissed it because of its location from where we then lived, but it turned out to be fantastic, and now I look back and think how lucky we were to find it.
Good luck to you - I hope everything pans out ok for you and your DC without too much stress.