Paraphrased from Alex's summary at the beginning of Episode 13.
It started in the bathroom.
Atalia was being threatened because she stuck her nose where it didn't belong, and you've got to threaten somebody in the bathroom for that. To save the day, Nix and Dili busted in while ChaCha did a saucy puppet show. It was a good puppet show though so you win some you lost some. Dili pointed out to the crowded bar that hey, the person watching Atalia is a pee pervert. After being outed as a pee pervert, that mysterious person just wrecked another monster.
Anyway after getting more scorps, the party left the bar and went to Nix's church group (Benevolent Society of Travelers) who run a youth hostel. Nix told her buddy Pathfinder Jen to not visit Nix's mom any more. Some of Nix's friends including Hey You realized that Dili had a wanted poster and through magic means, they did not recognize Dili. It was decided they could not stay there, so the pasty went to stay in Nix's mom's basement. Atalia went to stay with her grandma and found a note from the Handlers that says "See me" with an address in a different ward for 8pm that night and in a completely different set of handwriting, "Sorry, A. I did what I could." Signed J.