Sounds a bit like our situation.
PiL and I have fallen out, massively. DP refuses to get involved, DC feel that FiL has behaved appallingly towards me. (DC are adults and have arrived at this conclusion themselves, btw).
DP has told his parents that unless his Dad apologises to me, our DC want nothing more to do with them. Other than that, he is keeping out of it. DD returned her birthday present, and MiL was apparently 'heartbroken' and shocked (despite being forewarned this would happen).
I'm wondering what will happen at Christmas re presents. If they buy any, they will be returned as DC will refuse to accept them. PiL were due to come to us this year, (obviously not happening now) but they've asked DP to go out with them for lunch on Boxing Day, therefore still trying to cause a split within our little family group. And DP sits on the fence, floundering away, not knowing how to handle it.
He has to make up his own mind. If he wants to go out on Boxing Day, he can, DC are not happy, but they are his parents.
Grrr! Bloody families.