Did anyone from the local ATC facility observe the incident? Was there any communications with airport ops personnel? If either of those entities observed or got involved, there is a good chance it was or will get reported to FSDO. Get your FAR/AIM and review NTSB 830 just in case. Retain the paragraph you have written here in case a written statement is requested, such as from an insurance co.

Sorry this happend to you and your student. It could have been ANY of us in your shoes. This is a good reminder to all of us to "expect the unexpected" and stay vigilant in 2015...

If you don't have the AOPA legal plan or other professional liability insurance, now is a good time to look into those for piece of mind going forward.

V/R