Nicholas and Smike leave the theatre company and return to London. Nicholas no sooner arrives than he hears Sir Mulberry Hawk in a dining hall making objectionable remarks about his sister Kate. An argument ensues and when Hawk tries to leave in his carriage, an accident ensues causing severe injury. Meanwhile, Wackford Squeers and his son arrive in London intent on locating Smike. When they find him, the poor lad is locked in a pantry. Nicholas has the good fortune of meeting Edwin and Charles Cherryble who not only offer him a well-paying job but the use of a cottage at a very reasonable rent.