Details won’t be available for a while, but looking at the court docket, it appears that Judge David E. Rice stayed Diamond’s motion to sell their consignment stock until a hearing on September 30th.
Evidentiary Hearing Held by Video Conference: re: 531 Motion to Sell Free and Clear of Liens and Notice of Motion – MOTION STAYED; re: 679 Motion for Miscellaneous Relief AND re: 738 Objection AND re: 740 Opposition – ALL MATTERS ARE CONTINUED TO 09/30/2025 01:30 PM IN PERSON at Courtroom 9-D, Baltimore – Judge Rice.(related document(s) 531 Motion to Sell Free and Clear of Liens and Notice of Motion, 598 Objection, 601 Objection, 602 Objection, 603 Objection, 606 Objection, 611 Objection, 612 Objection, 653 Response, 679 Motion for Miscellaneous Relief, 728 Response, 730 Response, 738 Objection, 740 Opposition, 743 Line ) (Scott, Cherita)
The hearing will also deal with the Consignment Group’s motion to “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”.
Based on our reading of court documents and on information from parties close to the matter, it sounds like Judge Rice is giving every one time to get their shit together. In other words, Zombie Diamond couldn’t sell the inventory without a listing of the inventory, and more importantly, a disposition of the contracts between the Original Diamond and more than 120 vendors and publishers.
Given that Diamond’s paperwork is already a mess…this will take a lot of time.
And unfortunately for everyone, time is one thing Diamond doesn’t have. While this is a temporary win for publishers, there is a ticking clock of money that the Debtors (Zombie Diamond) don’t have.
In his own excellent analysis of the legal maneuverings, Milton Griepp of ICv2 points that that the situation is very dire for the Debtors:
Diamond Comic Distributors is in danger of administrative insolvency, and its records are in disarray, according to statements in an August 5 court hearing in the company’s Chapter 11 bankruptcy case, for which a transcript was filed on August 15.
Administrative insolvency refers to an inability of the bankrupt company to pay its professional fees and other essential costs after filing for bankruptcy. Those essential costs can include payments to critical vendors necessary to keep the business operating while in bankruptcy. When that happens, the Chapter 11 bankruptcy is typically converted to a Chapter 7 liquidation.
Essentially this means that the bankruptcy is itself going bankrupt. The loan to Chase is due on Saturday 8/23, a few days from now, and while I know from my own Chase credit card statements that they give you until Monday to pay…things won’t be better by then.
Just some speculation on my part: this still leaves publishers in a tough spot. A chapter 7 would mean the inventory still gets liquidated. There have been many ongoing negotiations to settle matters – at this point it could be cheaper for publishers to buy back their own stock – at pennies on the dollar – than to continue with two months of costly legal actions.
The biggest mystery in all of this remains Sparkle Pop, the company that actually purchased Diamond Comic Distributors and has remained silent in all of this except to sue Alliance and shield owner Joel Weinshanker from a subpoena. According to a recent filing, Zombie Diamond wants to get the money from Sparkle Pop that they received for comics sales after May 15th. In a motion on August 15th, the Debtors claimed:
Absence a satisfactory resolution, the Debtors intend to file appropriate pleadings in this Court to compel Sparke Pop to release the applicable funds.
Which means, that’s right, now Zombie Diamond could sue SPARKLE POP…and the circle would be complete.
While color about this might not be revealed for a while, the transcript will not be opened until November, unless it is admitted into evidence, i’m told that Judge Rice is pretty sick of this whole matter. And so is the comic book industry.
Shorter: disaster has been stayed for now, but at this point the most favorable outcome for publishers would be cheaply buying back their inventory in order that their distributor can pay its debts to its creditors…..which includes those same publishers. Welcome to the world of finance.
Click to access 092153882221.pdf
Say what you will about big banks, but Chase is pretty well run. I can’t believe they ever got involved in this in the first plac.e
Maybe a PR initiative aimed at CHASE? Comics are cultural capital, they don’t want that bad PR as an example of how they work to impact their consumer banking businesses. Big bank stealing inventory from Fantagraphics and D&Q would be a huge NPR story.
I’m curious about Sparklepop selling consignment inventory. Who is literally there in the warehouse? I’ve delt with 4 different pretty identical distribution company bankruptcy situations (from 30 years being a record label and publisher), we’ve always just shown up in person with some friends to physically take possession of the inventory we already own.
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