The dwarves and Bilbo have a great battle with the spiders but their numbers are too great so Bilbo devices a plan to use his ring and lure the spiders away from the others. The dwarves are confused at first at Bilbo's ability to go invisible but are too busy fighting to discuss it now. Bilbo lures the spiders away and kills a great many of them. The dwarves escape and run into the woods. Bilbo keeps running and eventually the spiders give up on the chase.

They all meet near one of the fires they had been chasing the night before. Bilbo is questioned over and over about the ring, Gollum, and everything that happened until now. They all show him great respect and some bow toward him. They ask him what his plan is for them to get out of here but Bilbo stays silent.

We then learn that Thorin was captured by the creatures they were all chasing who had kept moving their campfires. These creatures are Wood Elves, related to the High Elves they had met in Elrond's realm but not as refined. They bring Thorin to a cave which is the palace of their King who questions Thorin why he and his group were chasing the King's people.

Thorin explains they were hungry and only came to beg for food. The king keeps questioning him and Thorin answers until he's asked why he was in Mirkwood to begin. Thorin refuses to answer this as he knows that these elves and dwarves of past had a great war when the dwarves did some jewelry work for the elves but never received compensation. The dwarves then took some of the treasure of the elves justifying it in their minds as a form of payment. The elves didn't agree with the framing of what they considered theft. So, Thorin kept his mouth shut about the quest and the group's destination.

Thorin is placed back into a dungeon with the threat that he would have to stay there until he chooses to answer the questions. But the elves treat him kindly and feed him.