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Bakugo can't believe Deku developed a quirk and goes angrily charging at him. Mr. Aizawa stops him. At the end of the day, Aizawa claims no one will be expelled, and that it was a rational exception, which is a good thing as Deku did end up last.
The next day, All Might will be engaging the students in Anti personnel battle training. Indoor battles will take place between students. Two students will be designated as the villians and two will be the heroes. The villains will be hiding a nuclear weapon, and the heroes must either capture the villians or secure the weapon.
When partners are drawn, Midoriya is paired with Uraraka. They will be the heroes. What a stroke of bad luck. Midoriya is up against Bakugo and Ida as the villians.
NOTE: This episode takes place at the end of volume 1 and beginning of volume 2 of the manga.