* The Peach Splits: The peach, weakened from its journey, splits open in New York's harbor.
* Reunion with Aunt Sponge and Aunt Spiker: James is reunited with his horrible aunts who try to put him in a "home for boys" but are ultimately thwarted by the insects, who turn them into a "couple of nice, plump lady-bugs."
* James's Transformation: James, now free and happy, is finally able to live a fulfilling life, surrounded by his insect friends. He uses his peach pit as a boat to sail around the harbor, and he becomes a successful storyteller.
* A New Life: The insects settle in New York City, enjoying their new life and becoming minor celebrities.
The falling action emphasizes the resolution of the conflict and the establishment of a new, positive status quo for James and the insects. It highlights the theme of friendship, courage, and the importance of embracing the unexpected.