It’s over: Diamond Estate and Consignment Group reach settlement

After months of negotiations, the Diamond Bankruptcy Estate and the Consignment Group have reached a settlement that will allow publishers get Their Stuff back.

Taking what had appeared to be an intractable dispute that predated his appointment and continued during his tenure, the Trustee and the Ad Hoc Committee have reached a heavily negotiated resolution of a significant portion of the consignment related disputes and litigation pending in this Court and on appeal.

Publishers in the Consignment Group will pay a total of a bit more than waive their interests in a bit more than $600,000 to the estate to retrieve their goods from the Olive Branch warehouse. Publishers not in the consignment group can still take advantage of the settlement, although its a bit vague how.  

Some members of the Ad Hoc Committee have joined up with the consignment Group so the publishers signing off on this include, Ablaze, American Mythology, Avatar Press Battle Quest Comics, Action Lab Comics, Drawn & Quarterly, Fantagraphics, Green Ronin, Hermes Press, Living the Line, Paizo, UDON, and Zenescope, with Boom and Dynamite also joining in – however Dynamite is also expected to file their own motion in support. 

You can read the motion here and the settlement agreement here or scroll down. 

If you’ve been wondering why new of the Diamond Slog™ has been silent for so long it’s this: publishers, the estate and Sparkle Pop, owner of the warehouse where the consignment goods are stored, have been hammering this out for months. Indeed, the settlement motion alludes to this in its conclusion:

The Parties believes the Settlement is in the best interest of the Estates. It eliminates a burdensome administrative cost that is being asserted by Sparkle Pop with regard to the continued storage of the Consignment Inventory at the Warehouse; it relieves the Trustee from any further involvement in the CG Adversary Proceedings of the Settling Parties and the Appeal; it provides a substantial cash infusion to the Debtors’ Estate; and it protects the Consignment Group Members from further erosion of value of their Consignment Inventory as well as prevents the flooding of the market with respect to unauthorized sales of their inventory.

The Parties have consented to the relief requested in this Motion as set forth in the attached proposed Consent Order. The Settlement allows other consignors to join as they see fit. The Settlement is and has been one of the primary matters the Trustee has worked diligently to resolve despite how intractable it seemed to be in light of the varying positions of parties and complications tied to matters that preceded his appointment.

You don’t say! 

In case you came in late, Diamond declared bankruptcy in January of 2025. Since then, the remaining inventory stored at the former Diamond warehouse (now owned by Sparkle Pop, a subsidiary of holding company Ad Populum) has been a hot topic, with both the estate and Sparkle Pop claiming to have rights to it. In June, the Diamond Estate (then only in Chapter 11 bankruptcy) announced a plan to sell off the consigned inventory, and all hell broke loose. 

Since then, Diamond went to Chapter 7, essentially rewriting a lot of the previous agreements, and it’s been a tedious war of motions. Sparkle Pop seemed intent on getting as much money as possible for storing the consignment goods – valued at $47,395,000 in book value and a retail value of $113,737,000 – and even threatened a lien under Mississippi law. 

One of the oddities of the settlement is the disposition of the $600,000:

a. The Court Registry Escrow not allocable to the Otherwise Represented Consignors shall be released to the Parties and distributed as follows: (a) Fifty Thousand Dollars ($50,000.00) to the Consignment Group Members that are also members of the Ad Hoc Committee (to be allocated as it/they deem appropriate); and (b) the remainder to the Trustee (thus, the net amount to be paid to the Estates is $619,410.00).

So basically, Diamond declared bankruptcy because they owed to much money to their creditors. Now those same creditors are waiving their rights to money they are owed by Diamond to get back the stuff that the bankruptcy was supposed to protect for them. Except for $50,0000 which they get for…some reason, I guess?

But there’s another wrinkle: Sparkle Pop also holds nearly half a million dollars from illegally selling consignment inventory while this was all being contested. About $273,000 of that will also go into escrow:

Furthermore, Sparkle Pop currently holds (or should be holding) additional funds in the amount of not less than $417,496.00 (the “SP Escrow”) on account of Consigned Inventory both received and sold after May 15, 2025 and through February 13, 2026 (i.e., after the Sparkle Pop Sale Order), of which $273,503.00 represents proceeds from certain sales of the Consignment Group Members’ Consigned Inventory. The Consignment Group Members maintain that Sparkle Pop has not fully funded the Court Registry Escrow or the SP Escrow and, additionally, sold or removed from the Warehouse additional Consignment Inventory that is not yet disclosed such that amounts in addition to the SP Escrow and Court Registry Escrow have not been funded but remain due.

The language of the settlement suggests that Sparkle Pop could still throw a spanner or two into the works – publishers will pay to get all their Stuff from the warehouse and are responsible for its removal, but Sparkle Pop will be paid market pick and pack rates….unless something goes wrong:

h. In the event Sparkle Pop obtains a judgment against any Consignment Group Member for rent, storage, or similar charges with respect to such Consignment Group Member’s Consigned Inventory stored at the Warehouse, that Consignment Group Member shall have an Administrative Claim against the Estates in an amount equal to 25% of such claim.

i. In the event Sparkle Pop or the Consignment Group Members obtain a finding that any consignment inventory delivered by any Consignment Group Member was unreported as being sold by the Debtor prior to the Settlement, but was in fact sold by or at the Debtor’s direction, and paid to or for the benefit of Debtor, the respective Consignment Group Member(s) that delivered any such Missing Inventory shall be entitled to a chapter 7 administrative claim against the Debtors that is subordinate to certain other expenses and claims including any finally-allowed post-conversion administrative claims of Sparkle Pop, JP Morgan Chase and/or the Trustee’s professionals.

Consignment group members escrow amounts to the Court Registry Escrow – these are fees they are waiving in order to get their inventory back. 

And the SP Escrow, money Sparkle Pop collected and owes to the court: 

Consignment stock can also be destroyed if publishers ask. 

While this seems like a convoluted outcome, it’s really what this was headed for all along, and publishers get back some inventory with value, and also – a key point – prevent Sparkle Pop from liquidating the stock and flooding the market with cheap products. 

This is just a quick reading of the lengthy court documents. We’ll have more analysis – and maybe even some post-game commentary, soon.