Hi there, I really feel for your situation hun. I just think that while we would all like to avert an oncoming disaster, really this situation is not something that you are responsible for creating. Kate should be honest, Alice will know whether or not her work was up to par, the person who told you might be testing you to see if you can be trusted with confidential information. ( Or they might expect that you will give Alice a heads up so that they can feel less crappy about telling her, cos she already knows with out them being the real bearer of bad news!!!! )
The last bit is that you don't really know what will happen to them from the new circumstances that they find themselves in ... sometimes life just takes a turn for the unexpected and it is not always bad! When my husband was made redundant a few years ago we were thrilled - he wanted to leave that company anyway - it was time for a natural break, sods law of course dictated that he was one of the last to be let go( Two years after we danced with glee.) They paid us a kings ransom as "Golden Handcuffs". Gave him a better job title - great for seeking that new job he wanted anyway ... and one of his contacts from that company was the person who Head- hunted him into the City. So in the "big picture" things are not always as bleak as they appear. Good luck, head down and buy decent tea bags,choccy biccys and kleenex in anticipation of "D-day."