Santa Claus gave a speech in Barton Town; he claimed Jack was responsible for the elitism of Halloween 2k5 and called for justice. However, as Jack did not appear until after the ball, it would seem this was a ploy to boost his own reputation. Santa may have been plotting to fill the power gap left after the destruction of the Gambino Mansion and the last of the Gambinos.
His plot backfired, however, when Jack showed up to call him out on his threat. Santa, eager to show his superiority, allowed Jack to make the first move. Jack punched Santa so hard he instantly destroyed the Santa Claus shaped mech suit, and the Link List as well.
Flash back to Santa's childhood, when little Santa was being bullied by the other holidays. A chibi Jack saved Santa then, in the process scarring The Easter Bunny's face. The two promised to make the best holidays' ever, much better than Easter.
Flash forward to now, with Santa in the hospital. The doctor tells Mrs. Claus that their is little he can do. Santa's life signs flatline.