In the Book of Judges 2:10 it says that after the death of Joshua and his generation, "there arose another generation after them, who knew not Hashem nor the deed which He had done for Israel." Implicit in this sentence is that there was no one around who knew Torah (certainly if the entire generation did not know Hashem or His deeds on behalf of Israel, it is kind of hard to believe that they knew or believed in either the Written or Oral Torah). G-d, soon thereafter brings on the Judges (Judges 2:16). But if the knowledge of Hashem was lost and forgotton by the previous generation, wasn't there a break in the line of tradition of the Oral Torah, even if G-d restored it through the Judges?
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Pirke Avot 1:1:
That "a generation arose" does not have to mean every single person after Joshua. In fact, the verse you cite makes this distinction. First it says:
and then it says:
A generation arose that did not know, but it doesn't say כָּל, all.
It could be that most but not all did not know Hashem -- but you only need a few to preserve knowledge. Or, as Hacham Gabriel points out in a comment, knowing Hashem isn't strictly necessary to know or follow (most) torah.