WARNING: If you don't want to know what happened in this episode, don't read this photo recap!
All seems lost! Hailey and the other kids have been whisked away, and their abductor has left not a trace of their whereabouts. When Sax realizes Merry (and Amanda) are on the case he nearly flips his sh*t. After Merry pulls a gun on him, he decides to team up with his ex-partner, even if she's doing this to get out of Mr. Blue's debt.
Smoothie is the headmaster, and he's going to be teaching these kids a lesson. Apparently they've all been very disobedient, and need to be punished. Not really, but Smoothie does have a flair for outsized behavior. Looks like Santa and Smoothie are working together.
Over at Amanda's place, Nick is trying to attone for years of adultery, abandonment, and general assholery and prove that he's trying to help find his daughter. Amanda is understandably pissed, and slow to accept his oath of dedication.
Merry regains consciousness, and returns to the cop depot. When she does, she gets a talking to by two of her colleagues. They tell her in no uncertain terms: quit looking for this kidnapped kid. Is EVERYONE in this town corrupt?
Sax got himself aboveground, but Happy has disappeared. He was pretty disillusioned by all the ill will down in the subway before Sax was rescued. He really took it to his little hairy heart. So Sax is all alone walking through the cold streets of NYC. He overhears a guy whistling "Blue Christmas," and it brings back a memory.
The memory of when Mr. Blue introduced Nick to the Very Bad Santa, and requested that Nick put him under his wing. Nick declined. Nick puts the dots together: Blue's behind this mass kidnapping operation. But why?