Paul and Christine run into Michael and Phyllis as they are sharing their stories about Christmas. Michael asks Paul if he has looked into the recorded tape from Georgia yet. Paul says that he hasn't had the time, but later tells Chris he can't go on hiding the information much longer. Michael tells Phyllis that he is sure that they are hiding something. Damon appears and kisses Phyllis on the cheek. He tells her that he's there to see his ex-wife Adrian. Phyllis is shocked as she stares across the table at them.
Damon and Adrian talk about his relationship with Phyllis. Adrian thinks that Damon should keep the recorded tape information a secret to save himself. Phyllis interrupts them and introduces herself to Adrian. She tries to get Adrian to admit that she knows something but Adrian won't say anything. Damon tries to apologize for Phyllis' rude behavior.
Mac shows up at the Loft with her bags because she has decided to come back and live with J.T. Mac feels bad about leaving J.T. alone on Christmas. J.T. tells her that Colleen came to see him. He says that it's her birthday and wants to know if Mac will help throw Colleen a special birthday party. Brittany stops by to say hello as J.T. is going out the door. He tells Mac to fill her in on the good news. When Mac tells Brittany about Colleen, Brittany is shocked. Brittany tells Mac that if she has feelings for J.T. at all she better not think about moving in back at the loft. She says that if there is a possibility that J.T. and Colleen will get back together it would be hard for Mac to see that. Besides, Brittany advises Mac to get a boyfriend soon or she will end up a bitter old maid.
Brad is delighted to see Colleen. Colleen says that she graduated early and got accepted into college at NYU. Colleen says that she can't wait to meet the new love of John's live. Brad says that Colleen can decide for herself if she likes Gloria. When Colleen says she came back to see her family, Brad has a faraway look on his face. Colleen says she wants to see her dad happy again.
J.T. comes by and talks to Brad about throwing Colleen a surprise party. Brad thinks it's a good idea. Colleen comes downstairs and says hello to J.T. She wonders if J.T. remembers that today is her birthday.
Sharon wants to go skiing for the day with her family, but Nick says he has work to do. Sharon is disappointed and reminds him that if Neil were around Nick might have things easier. Nick thinks about the idea of hiring Neil back on as a favor to him. As he talks about Neil, he keeps repeating that Neil would be working under him and Nick would have all the control. Sharon doesn't understand Nick's power trip. She says that if Noah were on the playground would he like it if he talked to his friend's in that way? Nick says the difference is it's not a playground.
Victor and Nikki discuss their wonderful Christmas together. Nikki says it's much better now that Victor and Nick are not enemies anymore. Nikki suggests that Victor still keep a close eye on what's going on at Newman. Victor suggests to Nikki that she talk to Bobby. He can tell that it's been weighing on her really hard.
When Nikki talks to Bobby about his brother, Bobby says that he would rather not know the truth. He says that a long time ago he made up a story in his head that his brother was really alive and had been kidnapped by circus performers. Bobby's story brings tears to Nikki's eyes. She runs off complaining of a bad headache.
Bobby is talking with Victor in the living room of the Newman Ranch. He tells Victor that he doesn't understand why Nikki has been doing so much for him lately....she's now offered to buy the club from him for much more that it's worth. Bobby states he has now become suspicious about Nikki feeling she owes him so much. Victor tells him that he needs to ask Nikki about this himself. Bobby then wants to clear the air about the other day when Victor found them embracing. He assures Victor it was because she was upset, and that's why he was hugging her. Victor said he now realizes he jumped to the wrong conclusion that day and said it all makes sense now.
Jill and Jack are together at the Chancellor mansion. Jack has come to inform Katherine that he's accepting her offer to become CEO of Chancellor Industries. Jill obviously is very upset upon hearing this, but Jack tells her that he definitely wants her to work there along with him. Jill says she's sure that Katherine won't approve and feels that Katherine has been very vindictive. Sensing that Jill feels slighted by her mother, Jack reminds her that after all, he has more corporate experience that she does. Still, Jill feels that she should have been given the chance to head up CI. Again, Jack stresses that he wants Jill to be right there with him. He then poses a question to Jill: If things are so bad between the two of them, why doesn't she move into a place of her own? Jill at first offers no response to this. She then goes on to tell Jack about how depressing Christmas was, as she had been hoping that Katherine, Arthur and herself would spend the holidays as a family. She reminds Jack that Katherine places all the blame on her that Arthur left town. Jack consoles her and tells her that he's sure that in time they will mend fences, but Jill doubts this will ever be possible. Jill then leaves for the board meeting at Jabot, and Jack again stresses he will always have a place for her.
J.T. is at Brad's house with Colleen, still acting like he forgot her birthday. After Colleen's hints as to what day it is, J.T. nonchalantly wishes her a happy birthday. Colleen then inquires about Brittany and Bobby's marriage. J.T. seems a bit down about it but says that Brittany loves Bobby, so what's done is done. Colleen remarks that he almost seems sad about their marriage. J.T. changes the subject and tells Colleen that he wants to take her to the Athletic Club to celebrate her birthday and work out at the same time. Colleen does obviously not like the idea, but J.T. convinces her and she goes upstairs to get her things. After arriving at the Athletic Club, J.T. is still playing down Colleen's birthday, all the while with an impish grin on his face!
Brad and Ashley are both at Jabot sharing their concern for the current state of the company. Suddenly Gloria enters the office saying John won't be there for the scheduled board meeting, as he has been very worried about the company, and now it's affecting his health. Gloria seems genuinely concerned about John, telling them he's still at home and is feeling very sick and depressed over Jabot's problems. She insists that there must be something they can do to help John save the company. With this, Ashley tells Gloria to shut up. As Ashley continues to rip into Gloria, John comes into the office, having heard some of what Ashley said. John angrily informs Ashley that she is never to talk like that to his wife again. Gloria tries to convince John to come home one more time, but the board members are there and the meeting is about to begin. John assures Gloria he will be all right, and she agrees to leave for home.
Brad starts the meeting. Nikki, on the other side of the table, seems to be off in her own little world, her thoughts obviously not on the business at hand. Jill asks Nikki if she's all right, but Ashley tears into her, rudely yelling at her to leave if she can't concentrate on what they need to discuss. Nikki gets up and excuses herself, saying that she can't deal with this right now. After discussing Jabot's many losses, the conversation turns to bankruptcy. Jill adds that the company's major trouble began after firing Jack. This upsets John, and the two of them begin arguing about Jack. Ashley, this time, is directing her anger towards Jill, demanding to know what Jill has ever done for the company. Jill spews back, "I could ask you the same thing, Ashley!" Ashley yells back that she's the only one doing anything for the company. She then tells the other board members that she actually approached Victor and asked him about Jack coming back to Jabot. On hearing this, Brad becomes irate. Jill then informs them all that at this very moment Jack is with Katherine accepting her offer as CEO of Chancellor Industries. After still more discussion, they all solemnly agree on bankruptcy.
Katherine comes downstairs and begins talking with Jack. Jack then informs her that he is accepting her offer for the position of CEO at Chancellor Industries but says he wants to run it as he sees fit. Katherine is happy and relieved that Jack has accepted her offer, admitting that she made a huge mistake in hiring Elliot Hampton as CEO when she knew nothing about him. Jack promises he won't let her down. Katherine then tells Jack about her one stipulation...that Jill is not to be involved in the company, NOT AT ALL; this is non-negotiable. Jack asks why she feels like this because after all, Jill is her daughter. Katherine only tells him that her decision is final, and she won't discuss it. Jack reluctantly gives Katherine his word that he will not involve Jill in the company...they shake hands on the deal.
At Crimson Lights, Daniel and Kevin are sharing a table. Daniel begins talking about Mac, saying he really wants things to work out between the two of them. Upon hearing this, Kevin suggests to Daniel that he give up on her. Daniel then sees Mac come into the coffee shop and accuses Kevin of wanting her for himself. Kevin can't deny this and admits that he does like her. Daniel reminds Kevin that he's supposed to be his friend. Mac comes over to their table. Daniel then says goodbye to her and leaves. She wonders what his problem is. She then sits down with Kevin. He senses that something is bothering Mac. She admits that it's J.T....he asked her out on another date but then turned around and asked her to help plan Colleen's surprise birthday party. Kevin becomes very nervous upon learning Colleen is in town, telling Mac only that she doesn't like him. Mac says people just don't know the real Kevin and says all those other things are now in the past. She sees him as sweet and caring and tells him she's glad they are friends. Kevin confides to Mac that she's the best thing that has ever happened to him...he touches her hand from across the table. They then plan to go to the Athletic Club and will have lunch together.
Nikki has come into to Crimson Lights. While getting her coffee, she literally runs into Paul. He knows that something is bothering her and guesses that it's Bobby. He wonders if she told him about Joshua, and she says she has not. Nikki confides to Paul that she can never tell him, as Bobby believes Joshua is still alive and that they will meet up one day....she cannot destroy this for him and will not take away his fantasy that his bother is still alive. Paul disagrees and feels if Bobby is told about this, then he can move on with his life. Nikki still refuses. Paul concludes that all this doesn't add up and finally asks Nikki how deep her feelings really are for Bobby. She shakes her head and sadly looks away, saying this is just the way it has to be.
Meanwhile, Bobby and Victor are still talking. Victor tells Bobby that his feeling is right, that Nikki does indeed have something heavy on her mind, but she won't tell Bobby because she's afraid of his reaction. Since this is the case, Bobby pleads with Victor to tell him what it is. Victor then agrees that since Bobby insists, he will tell him. With his eyes locked on Victor, he waits to hear what Victor has to say...
Victor told Bobby the truth about why Nikki felt an obligation to help him. Bobby was stunned to hear that as a five year old, she'd shot his brother. Victor reminded him that it hadn't been Nikki's fault. She was only a child; it was her father who should have taken responsibility. Victor left in response to a call from Ashley saying she wanted to see him. Bobby took a walk around, came back inside, and yelled for Nikki. When she didn't appear, he poured himself a drink then hurled the empty glass at the wall.
Victor arrived at Jabot to hear Ashley's news that the company was about to declare bankruptcy. She held him responsible for that. Victor said the company had been mismanaged and there were more creative ways to save it. If she wanted his help, she should call him.
Colleen was convinced that J.T. was planning a birthday surprise for her. She was enjoying trying to figure it out until she saw Kevin at the athletic club. When he tried to speak to her, she reacted forcefully and told him never to bother her again. J.T. saw her leaving upset and followed her. Mac had told J.T. that she couldn't help him decorate for Colleen's party, but she would try to come. After Colleen and J.T. left, Mac tried to get Kevin to tell her what he'd done in the past to make them hate him. Kevin wouldn't. Mac left, saying she didn't want to spend the day with Kevin when he couldn't be straight with her. Kevin went home and told Lauren and Michael that he wanted to tell Mac the whole truth. They discouraged him, reminding him that not only could he be opening himself up for legal problems, but he'd be putting Mac in a precarious legal position if she didn't turn him in.
After J.T. and Colleen went their separate ways, Sierra and Lily showed up at the Carlton house to welcome their friend back to Genoa City. They tried to figure out if she and J.T. might be getting back together. Meanwhile, J.T. found Brittany at the loft. She agreed to help him put together Colleen's surprise party, but she also pointed out that the reason Mac wouldn't help was because she had feelings for J.T. J.T. didn't believe her.
Olivia freaked out when Malcolm asked for her medical advice on DNA tests. She said that Lily was Neil's daughter in every way, and if Dru knew that Malcolm was interested in pursuing this, she'd come unglued. Neil came in just as Olivia had to answer a page from the hospital. Like Olivia, Neil was full of questions about why Malcolm was content to work at Crimson Lights. Malcolm was adamant that his brother needed to leave him alone and stop pushing him for answers. He had his own stuff to work out, and he wasn't asking for any help.
Jack's office at Chancellor Industries was under renovation, so he was using an office at Jabot, where Phyllis found him. She congratulated him on his new job and gave him a CEO coffee cup as a belated Christmas gift. They talked about Daniel and her worries that Daniel was having to parent her. Jack said that he was proud of Daniel for stepping up to the plate; he was a good kid. Phyllis agreed. When Jack started rubbing her shoulders as a return gift, the two finally agreed to spend their New Year's Eve together. They left with Jack promising to give her a surprise.
Victor went to the coffee house to talk to Nick. He said that Nikki had been going through something, and he'd done something that was going to make her unhappy. He asked Nick to take Sharon and the kids and spend some time at the house. When Nick pressed for more details, Victor said it would be better to let Nikki explain it. Nick promised to spend time with his mother.
Bobby was waiting for Nikki when she got home. When she said she'd had a rough day and tried to go upstairs, Bobby told her that he knew the story about his brother. Victor had told him. Nikki wondered if he hated her. Bobby didn't answer, saying that this news had taken away his dreams of ever seeing his brother again. He'd never gotten to say goodbye. He didn't even know where his body was. Nikki told him about the skeleton that was found buried behind the rec center. When she asked if there wasn't something she could do for him, Bobby said she couldn't make things right by throwing money at him. She should have told him the truth as soon as she knew it. All he wanted was to be alone. He walked out. When Victor came home, Nikki raged at him for betraying her confidence and said she was too angry to even speak to him. She ran upstairs, leaving Victor with a worried expression.
Brittany was rehearsing at the club when Bobby walked in. She finished her song, then went to him, saying she'd never seen him look so upset. Bobby didn't tell her what was wrong. He was just glad that he had her in his life; she was the best thing that had ever happened to him.
Mac arrived home to find J.T. alone. When he told her that Brittany had been by, she made a comment about how he had two girls chasing after him. J.T. said that Brittany wasn't chasing him. Nor did he know where things stood with Colleen. In any case, he was more concerned about her. He begged her to tell him that she wasn't involved with Kevin Fisher. Mac said they were friends. J.T. wondered if she knew all the things Kevin had done. Without realizing the gravity of what he was talking about, Mac said that Kevin had admitted that he'd made some mistakes, but he had changed. J.T. said Kevin couldn't change. The best thing for Mac to do was stay away from him, because Kevin was really messed up.
After J.T. left, Kevin showed up at the loft. He didn't like the way they'd left things earlier. Mac reminded him that was his fault. She couldn't understand why he didn't trust her enough to tell her the truth. She wasn't even sure what he'd been accused of, especially with Colleen. Kevin finally said that his brother had told him it wasn't a good idea to burden other people with those things from his past. That was the first time Mac realized that Michael Baldwin was Kevin's brother. But she still didn't understand why Kevin didn't believe in her enough to be honest. When Kevin still wouldn't talk, she gave him his coat. Kevin wondered if that was the end of their friendship, and Mac told him that she'd talk to him later at the coffee house.
Neil and Malcolm continued to argue at Crimson Lights, comparing which of them had had the hardest time after Malcolm's supposed death. Malcolm finally demanded that Neil give him some room to breathe. What he did was his own business. Neither man was aware that Lily had come in and was watching them argue. After Malcolm walked out on the patio, she went to her father and asked what was going on. Neil said he wasn't sure, and Lily promised to talk to Malcolm.
After Neil left, Lily went to join her uncle on the patio. She teased him into taking pictures of her, and Malcolm easily slipped back into photographer mode. When they were done, she rattled on about how Malcolm used to photograph Dru. She wondered if she reminded him of her mother, and she recalled a time that he'd come to Paris, assuming it had been for a job he was shooting. When she suggested that he could go back to photography, Malcolm snapped at her. Lily apologized, saying she hadn't meant to push him the way everyone else did. She hurriedly left, her feelings hurt, and Malcolm looked after her with remorse.
Dru flipped out when Olivia told her that Malcolm was thinking of asking for a paternity test. Dru knew that Malcolm was going to ruin her happy family. She refused to have any part of destroying Neil's and Lily's happiness. Olivia told her it didn't have to be that way. They could get a swab from Lily and a swab from Malcolm and have it all done privately and anonymously. And the results could give Dru peace of mind once and for all, because it was likely that Lily was Neil's daughter. Dru finally agreed to look at the information on the DNA test. Later, when she was alone, Malcolm showed up. When he told her that he wanted a paternity test, she lost her composure again.
Drucilla is devastated that Malcolm insists on having a paternity test to determine whether or not he is Lily's father. Dru says that she can't believe Malcolm would be so cruel. Malcolm tries to tell Dru that he isn't trying to hurt anyone; this is something he must do. Dru says that Olivia told her they could get a paternity test privately online. Malcolm tells Dru that she better order it soon. Neil comes home and wonders what Malcolm is doing there. He says that he just stopped by to wish Dru a happy New Year. Neil asks Malcolm if they could make a resolution to work on becoming brothers again.
Nick makes the house special for Sharon on New Year's Eve. Sharon tells Nick that after skiing with the kids she realizes how much she misses them. She wonders if Victor was right about work getting in the way of spending time with family. Nick tells Sharon to do whatever she feels is right. He puts on music and they dance romantically. They sit by the fireplace and toast to being happy together. Sharon goes off to surprise Nick with a nightgown but he is already asleep.
Colleen stops by the loft to say hi to J.T. He asks her what is going on between them. She doesn't want to talk about it. When J.T. suggests they go to a movie for Colleen's birthday she wriggles her nose. They decide to go over to Brad's and hang out there for awhile. When Colleen comes home, everyone yells surprise. Colleen is happy that J.T. decided to do something special for her. When they are outside together she kisses him.
Later, as J.T. is putting candles on Colleen's cake Mac shows up. She says that Colleen is lucky to have a friend like J.T. He says that he's lucky to have a friend like Mac. Mac kisses J.T. When she asks him if she shouldn't have done that, he says he has to bring the cake to Colleen.
At Colleen's party, Devon wonders why Lily is upset. She says that Malcolm got mad at her earlier. Devon says that she should stay away from adults' problems. Daniel talks to Lily and offers to get her a drink. She says she will get herself one. Daniel apologizes, remembering what happened to her at the Rec Center. She says that she doesn't want to talk about it. When Daniel brings her back a drink, Lily feels uncomfortable taking it. Sierra says it's fine. They are at Brad's, no one there is going to try to hurt her.
Malcolm calls Lily and apologizes for getting angry at her. He wishes her a happy new year. She is glad that he called.
Phyllis wonders where Jack is taking her. As they drive through the snow, he reveals that they are going ice skating. Phyllis thinks it's a great idea. Just then, Jack's car spins out of control and they get stuck in the snow. Phyllis is upset that Jack doesn't have any alcohol. As he gets a blanket out of the trunk they snuggle close to stay warm. Phyllis says that she's not sure what's happening between them, but she wants to take it slow. Jack suddenly realizes he could have called On Star to come and rescue them. Phyllis says maybe they should wait a little while longer.