Diamond consignment inventory dispute goes to mediation; Sparkle Pop sues Dynamite

While we were all at NYCC, the Diamond Bankruptcy Matter was grinding on, and now a pretty huge deal: everyone involved – that means Diamond, the Official Committee of Unsecured Creditors, Chase Bank, the Consignment Group, the Ad Hoc Committee, and even Sparkle Pop – have agreed to submit their disputes to the Court’s Bankruptcy Dispute Resolution Program.

That means that instead of the 30 separate lawsuits Diamond filed against publishers with consignment inventory, and all the other back and forth tangle, a single judge will serve as the resolution advocate, namely the Hon. Thomas J. Catliota, Retired Bankruptcy Judge for the United States Bankruptcy Court for the District of Maryland. The parties have requested to have the BDRP conference completed no later than October 29, 2025. 

As you may recall, in June Diamond filed to sell all their consignment inventory in order to help pay off their debts to Chase Bank. This led to publishers objecting, a showdown in court, and further fighting between Diamond and Sparkle Pop. Diamond also filed those 30 lawsuits in order to put their claim on the inventory. Both sides have invoked rather arcane and highly technical precedents and statutes to back up their claims. 

Publishers broke down into two groups: The Consignment Group including Aspen, Black Mask, DSTLRY,  Dynamite Entertainment, Heavy Metal, Magnetic Press, Massive Publishing, Oni, Panini UK, Alien Books, Graphic Mundi, Titan, Vault, and Dark Horse. 

And the Ad Hoc Committee: Ablaze, American Mythology, Avatar, Battle Quest, Action Lab, Drawn & Quarterly, Fantagraphics, Green Ronin, Hermes Press, Living the Line, Paizo, UDON and Zenescope. 

Judge Catliota will handle the following disputes: 

• Motion Seeking Entry of an Order Requiring the Debtors to Assume or Reject Executory Contracts with Members of Ad Hoc Committee of Consignors; and For Related Relief [D.I. 679] (the “Ad Hoc Committee Motion”);

• Motion Seeking Entry of an Order Requiring the Debtors to Assume or Reject Executory Contracts with Members of the Consignment Group; and For Related Relief [D.I. 747] (collectively with the Ad Hoc Committee Motion, the “Consignors’ Motions”);

• Debtors’ Motion (I) to Enforce the Automatic Stay, (II) To Enforce the Sale Order, and (III) Granting Related Relief [D.I. 784] (“Stay Motion”), to the extent the relief requested was not resolved in the Consent Order Resolving, in Part, Debtors’ Motion (I) to Enforce the Automatic Stay, (II) to Enforce the Sale Order, and (III) Granting Related Relief [D.I. 878] (the “Consent Order”);

• Any and all claims related to the Consent Order, including, but not limited to claims raised in the Stay Motion and any objections or responses thereto;

• The adversary proceedings commenced by the Debtors against members of The Consignment Group and the Ad Hoc Committee (the “Adversary Proceedings”); 

• Any administrative expense claims asserted by members of The Consignment Group or the Ad Hoc Committee;

• Any causes of action under chapter 5 of title 11 of the United States Code against members of The Consignment Group or the Ad Hoc Committee;

• Any and all claims related to the proceeds deposited by Sparkle Pop with the Court Registry pursuant to the Consent Order; and

• Any other related claims or causes of action between the Parties.

Any other publisher involved in Diamond can also join in the proceedings. 

Whew! I hope Judge Catliota is a fast reader. 

While I haven’t heard the thinking behind this, it’s not too hard to figure out: with legal proceedings dragging on and on, and money going out to lawyers at a 7-figure clip, putting everything together into a package for mediation is the speediest way to get everything settled. 

I’m not a lawyer but: a possible resolution to all this is publishers buying back their own inventory at a vastly reduced rate (what Diamond was probably going to sell it all for anyway.) But we’ll see. 

While this may settle a lot of what has been disputed for all these months, THERE’S STILL MORE. 

In the you’re not gonna believe this category, Sparkle Pop, the holding company that bought Diamond Comic Distributors assets, is suing Dynamic Forces, parent company of Dynamite Comics, for $1.7 million dollars. This is a separate lawsuit filed in New Jersey District Court (Dynamite is located in New Jersey) and not an “adversary proceeding” as part of the bankruptcy. Sparkle Pop alleges that Dynamite owes them the money for costs associated with selling their comics:

As part of the commercial relationship, Dynamic agreed to reimburse DCD for storage fees, freight costs, certain marketing-related expenses, and other costs (collectively, the “Recoverable Costs”).

DCD fulfilled its side of the bargain. It sold vast amounts of consigned Dynamic Products, remitting millions of dollars to Dynamic. But Dynamic breached the agreement by failing to reimburse DCD for its costs and fees as agreed.

Sparkle Pop has also filed a “quantum merit” claim, alleging: 

Defendant accepted, retained, and benefited from the services rendered by Plaintiff. As a result, Defendant has been unjustly enriched, and Plaintiff is entitled to recover from Defendant the reasonable value of the services provided, in an amount to be determined at trial, together with interest, costs, and such other and further relief as the Court deems just and proper.

Unmentioned is Dynamite’s own filings against Sparkle Pop/New Diamond, alleging that they are owed at least half a million dollars in money from Diamond’s sales of their comics. Sparkle Pop has been forced to give some of that money to the court, as it shouldn’t have been selling consignment inventory. And as far as we’ve heard, Sparkle Pop has declined to pay ANY of the publishers whose books it has been selling since May. They have some chutzpah suing anyone for breach of contract, but when you have a lot of money, you get to file a lot of lawsuits. 

In case you missed it, the sole Diamond presence at the very large NECA/Wiz Kids booth at NYCC was a lonely display case with some toys in it, located on the outside of the booth. It doesn’t even say Diamond on it, just a logo. Seems sort of punitive. 

The whole Sparkle Pop side of this business has been a wild one.