We are given the names of 3 of the 10 Wizard Saints, the most powerful mages in the land: Makarov, the master of Fairy Tail, Jose, the master of Phantom Lord, and Gerard, one of the councillors based in Era.
It is discovered during the episode that Erza uses her 'requip' magic to change her normal clothing as well as her armour.
The basement of Fairy Tail's guild can be used as a temporary beer hall. It is normally used for storage.
Gajeel, the Iron Dragon Slayer, makes his first appearence in the anime during the episode.
Levy: If you don't mind, would you let me read your book?
Lucy: B-But... It's not something I'd want to show other people...
Jet: What're you talking about? Isn't the point of writing to let other people read it.
Droy: They say that being an author is like showing off your butt to everyone, right?
(Lucy is embarrassed and covers her rear with her hands)
Levy: You won't get anywhere being embarrassed. Let me see! Let me see! Please! And I'm not talking about your butt...
Levy: I'm super curious, Lu-chan! They say you're writing a novel?
Lucy: The rumor's already make the rounds?
Lucy: I think I have a good idea who it was that spread it around...
(they find Levy, Jet, and Droy all beaten up and attached to a tree with iron bands)
Makarov: I can stand being reduced to a run-down beer hall... But no parent can stand idle while the blood of his children is spilled!
Lucy: Is Phantom really that amazing?
Natsu: Those guys ain't nothing.
Erza: No... If it came to blows, mutual destruction is ensured. Our offensive powers are about equal. Master Makarov is said to be on par with Master Jose, also one of the ten wizard saints. Then there are the Element 4, their S-class level wizards. Our biggest worry is "Iron" Gajeel. He's the one I believe is responsible for the attack on the guild. The Iron Dragon Slayer.
Lucy: Dragon Slayer? There are ones other than Natsu? So does that mean he like...eats iron and stuff?
Gray: The master and Mira-chan want to avoid a fight because they know the consequences of two guilds battling each other. It's to help preserve the peace of the entire world of magic!
(Happy starts going through Lucy's laundry and Plue finds candy)
Lucy: Hey, cat over there, what are you... And Plue, what are you doing?
Natsu: Ooh, Plue! What's that you're eating? Let me have some!
Happy: Erza, look! I found some sexy underwear!
Erza: Wow! You actually wear this?
Jet: We've always been on bad terms with Phantom.
Droy: Maybe we should go crush them.
Levy: I said to stop that. We're up against Phantom... That Phantom...
Natsu: We're kiddin', sheesh! Don't cry, Oopy!
Lucy: I'm not crying, and I'm not named "Oopy!"
Natsu: Put together me, Happy, Erza, and underpants-man, and there's no job we can't do!
Gray: Don't call me underpants-man.
Natsu: That was a great job!
Happy: And it looks like the client really appreciated it.
Gray: Well, we finished it up real quick since I was there.
Natsu: Huh? And what makes you say that, jerk?
Gray: Just thinking about how you were nothing but extra baggage for this job.
Natsu: How about I teach you what kind of extra baggage I am?
Gray: That made no sense at all.
This episode marks the beginning of the Phantom Lord Arc.
Japanese Title: Yūki no Shihaisha 幽鬼の支配者