How about asking her family doctor if he would provide a reference. Particularly if he has known her for a number of years. Or her minister of religion if that is appropriate. She should tell her prospective employer that one of her former employees has now gone out of business, I am sure they would understand.
She could put something like .... she has been a housewife and full time mum for the last 10 years, but finds that, now that her children are old enough and in full time education, she would like to start working again. Having run a home and looked after her children for however many years, she considers herself to be more than capable of acting in whatever capacity this potential job is for. Think it might be worthwhile listing any exam achievements and the name of her secondary school. Oh, how about her former headmistress for a reference - just a thought!