Hey, and thanks so much for using Ex Novo to enrich your RPG campaign; really do hope it will help you!
As for the question, well, there isn't a specific rule in place, but I would argue that the faction probably remains in play, albeit completely powerless. If though --narratively speaking-- it'd be more appropriate to have it vanish I'd say go with that instead.
Either way it really is up to you to decide what feels right. playing loose with the rules is part of the experience anyway :)