Universal Credit and Section 21 combined

Possession - Section 8 and Section 21

Hello NRLA, In my HMO my last tenant who moved inJuly & had a job then, lost her job soon after and now on UC. My HMO management agency informed me that she declared she wants to be made homeless to get herself and her friend a council place. She's smart and using the UC system and being lazy sitting around in the property & not looking for a job. Now she is making life very difficult for the other 3 professional tenants who are pleading to the agency & myself to get her out. The other tenants said they will have to leave if she is not removed. The agency is serving section 21 today. I may lose the other tenants before Christmas while waiting for her 2 months notice to move out.
She now has her friend staying with her when it is clearly a breech of her contract. When this was made clear to her by the management agency as the property is a 4 person not 5 HMO! She said 'so what' This puts me in a dangerous position as its not licensed for 5 people.

I would greatly appreciate your advice on how make good this situation.