In episode 9 the characters brush off their failures and recreate themselves, weaving new legends that fit the past and future as they prefer to see it. Meredith wakes up in Katherine’s motel room, but her loyalty is still to Burt, so first she tries his latest version of events on for size, in trade for Katherine’s location. Katherine has other plans for the evening, since it’s her and Bash’s anniversary. They remember the past and take care of unfinished business.
Burt chooses to believe Avron’s version of the duffel bag story, which implicates Matty. This is probably because he perceives Matty as a Joel loyalist, having been gone for the last 2 years of Matty’s Burt worship. This is not a wise decision on Burt’s part, especially combined with the easily dismissed lies he tells to Meredith.
The old man is slipping. Or self-destructing. Either way, the romances are over in this episode.