So L-ELF wants to bring Valvrave to Dorssia and he knew that it will come to an end where the students will be forced to hand over Valvrave. Else, it will be taken to them by ARUS or DORSSIA as both parties have personal interest over the newly invented weapon of JIOR. At first, they sided with ARUS as they taught that they've saved them from the invading Dorssian forces but it was then revealed that all they wanted was to get Valvrave and abandon the students as Dorssian forces are on it's way to their location.
Haruto seized the Senator by piloting Valvrave again but sadly they can't rely on ARUS forces because they betrayed them in the end. But Shoko finally found a solution which will work for them by using Valvrave as a Hostage and if any of the two forces oppose their decision to become independent then they will side to the other colony and hand over Valvrave to them so they can have the upper hand to win the war.
But what's surprising about this episode is that they decided to separate the module and create an independent party of students. Which I think is really stupid, As far as I can see they only have Valvrave and I think that's not enough for them to defend their newly created colony/module without military forces. Having Valvrave as a hostage is not enough but they still need to sustain themselves with basic commodities.
Nevertheless, it's a great episode. What I want to see is what will L-ELF do in case the separation become successful. And since he's trapped from the module itself, will he cooperate with them and turn his back away from DORSSIA?