Gray bat Lyon, but it's too late: Deliora has been resurrected, but immediately dies from having been frozen for 10 years. Erza identifies the curse: a magical membrane created by Moon Drop, which she destroys with Natsu's help. The "inhabitants" turn out to be demons with altered memories. The team returns to Magnolia and finds their HQ demolished by Phantom Lord. Levy and her friends are attacked by Gajeel Redfox (Phantom Lord's Iron Dragon Slayer). Makarov declares war. Lucy is captured by Juvia Lockser and Sol (from Element 4).