Sparkle Pop vs Alliance court filings contain startling allegations

Oh man, the Sparkle Pop vs Alliance Entertainment lawsuit has been HEATING UP. While Sparkle Pop’s initial complaint was part of the Diamond bankruptcy filings, this is a separate lawsuit with many filings that have to be accessed separately. And boy, there are a lot of filings. With the help of Graphic Policy’s Brett Schenker, I’ve been able to access them and there are hundreds of pages to digest. But they include:

• A statement from Joel Weinshanker, head of Sparkle Pop and new owner of Diamond, in support of their suit
• A statement from Chuck Parker, Diamond’s President, in support of the suit
• AENT’s response to the complaint, supported by
• A statement from Bruce Ogilvie, chairman of Alliance
• A statement from Mike Schimmel, Diamond’s former VP of Sales and now Senior VP of Sales at AENT. 

While one looks forward to hearing from colorful figures such as Weinshanker and Ogilvie, sadly these statements are heavy on the legalese. That said, the AENT response does include some of the vivid language that enlivened their own lawsuit against Diamond over the WotC contract. And Schimmel’s statement include some startling details that give us (perhaps) the first look under the hood of the new Sparkle Pop owned Diamond. 

A refresher: Sparkle Pop is suing Alliance alleging that Alliance breached NDAs, stole trade secrets and engaged in “Tortious Interference with Employment Contracts,” by hiring seven former Diamond employees at similar positions at Alliance. 

I haven’t had time to thoroughly go over all the filings, but a few important points:

AENT’s main contention is that the NDA that they signed back on October 24th, 2024 was between Alliance Entertainment and Diamond Comics, as it then existed, and NOT with Sparkle Pop/Ad Populum; in fact, they claim, Sparkle Pop’s purchase agreement specifically disavows assignment of existing contracts. A fine point of law perhaps, and one that is disputable, but as AENT’s response puts it:

1. PLAINTIFF LACKS STANDING TO ENFORCE THE TERMS OF A CONTRACT IT IS NOT A PARTY TO AND DOES NOT INURE TO ITS’ BENEFIT

AENT also contends that Sparkle Pop did not specify any actual damages or trade secrets that were breached, and the suit lacks merit on that. 

More explosively, Schimmel’s statement includes a letter from Parker dated May 16th at 3 pm stating that Schimmel had been let go from Diamond.

I am writing to share some difficult news with you today.

As part of the sale of Diamond to Ad Populum, the new ownership team has made its decisions about which employee positions will be a part of the new company. Unfortunately, I have been notified that your position is not among those being carried forward. As a result, your employment with Diamond Comic Distributors, Inc. will officially terminate effective May 17, 2025.

I am sure this is hard news to receive, and I know the restructuring process has been difficult and uncertain. Please know, this staffing decision is not a reflection of your performance or your contributions. These decisions have been made to reflect the structure and needs of its plans for the new organization going forward.

This directly contradicts Weinshanker’s statement that Parker told him Schimmel had resigned:

I called Chuck Parker, the President of Diamond Comic on May 11, 2025 to inform him that Mike Schimmel, the head of sales at Diamond Comic was resigning on May 16, 2025, only one day after the APA had closed. Mr. Parker subsequently informed me on May 19, 2025 that Mr. Schimmel had accepted an employment offer with AENT. 

Parker gives a similar account, claiming that Weinshanker told him Schimmel was resigning on May 11th, and resigned on May 16th. 

One of these things is not like the other. 

AENT’s response also includes some descriptions of Sparkle Pop’s business plans after they purchased Diamond:

Vendors Fled as Sparkle Pop Refused to Honor Its Payment Obligations

Immediately upon the Court’s approval of the sale, Sparkle Pop sought to implement severe cost cuts without consideration of the impact the cuts would have on the business or employee morale. One such cost cutting measure was Sparkle Pop’s refusal to pay vendors unless those vendors agreed to substantial discounts and extended payment terms. See Declaration of Mike Schimmel (the “Schimmel Decl.”), ¶5. Joel Weinshanker, manager of Sparkle Pop, referred to this as “playing chicken with idiots,” in referring to its vendors. Id.

As a result, DCD’s reputation and sales plummeted as vendors fled and sought alternative partners. As summarized in an exit interview of a former employee “much of the industry is rejecting Diamond, and too many businesses have made it clear they do not want to continue business with Diamond. Instead, they are moving to competitors. . . . [h]is impression was DC and Marvel leaving made it look easy, so others followed.” Weinshanker Decl., Exhibit C, at 4 (under seal).

Weinshanker’s statement has his own version of their plans, and why the seven employees leaving is damaging:

At Ad Populum we believe in revitalizing struggling companies through an infusion of resources, fresh perspectives, and synergy by and between the various Ad Populum affiliates. It was always our intention to do the same with such a storied distribution business as Diamond Comic, who had been a long-time customer of several Ad Populum affiliates. The role played by seven of the leading employees in the sales and purchasing department of a distribution business cannot be overstated. Similarly, the importance of non-disclosure of Confidential Information  amongst competitors in a market segment is critical. Unless Alliance is required to immediately destroy of all Confidential Information and the refrain from employing any of the seven departing Diamond Comic employees Sparkle Pop will suffer irreparable and severe damage to its business.

Schimmel’s statement is the real barn burner here. I’ve embedded it below but a sample:

1. 5. Immediately upon the Court’s approval of the sale, Sparkle Pop sought to implement severe cost cuts without consideration of the impact the cuts would have on the business or employee morale. Notably, Sparkle Pop refused to pay certain vendors unless those vendors agreed to substantial discounts and extended payment terms, counter to section 2.3(d) (“Assumed Liabilities”) of the Sparkle Pop asset purchase agreement which provides that Sparkle Pop shall assume “amounts due with respect to open purchase orders for inventory ordered after the Petition Date and not delivered as of the Closing Date as set forth in a schedule to be provided to Purchaser prior to the Closing Date.” Joel Weinshanker, the manager of Sparkle Pop, referred to this as “playing chicken with idiots” – referring to its vendors.

1. 6. My job became exponentially more difficult as it was impossible to maintain vendor relationships when vendors were not being paid. Mr. Weinshanker demanded that I leverage my relationships with vendors to coerce them into accepting his payment terms. Doing so would have ruined my reputation in the industry that I had spent 29 years building. Many of  the vendors refused to accept these new terms and sought alternative partners. 
   7. Sparkle Pop also sought to substantially cut its payroll expenses and directed that the Vice President of Purchasing and I identify employees for termination promptly upon closing of the sale transaction.
   8. On May 10, 2025, I received a call from Mr. Weinshanker. He gave me a 24-hour ultimatum to “get on board” with his program and to use my relationships with vendors to coerce them into issuing costs rebates and extended payments terms, and that I identify additional sales staff to terminate upon closing of the sale transaction.
   9. He also stated that because I had not identified enough staff to fire, including terminating Joe Lunday, Director of Ecommerce Sales, and the Executive Director of Purchasing from the purchasing team, my salary would be immediately reduced by 25%. This contradicted Mr. Weinshanker’s promise that my salary would not be reduced.
   10. That same day, I called Robert Gorin, the Debtors’ Chief Restructuring Officer. He told me that I was under no obligation to stay with DCD and that I could “do whatever [I] want.” He also asked that I call Alex Haesler of Raymond James.
   11. I spoke to Mr. Haesler that same day, who explained that because I was not an officer or director of DCD, and was an “at will” employee, I was free to speak to any potential employer. I inquired further if I could speak to companies who submitted bids for Debtors’ assets at the Auction, using the example of Universal, and he reaffirmed that I was free to speak to any interested parties.
   12. On May 11, 2025, I again spoke to Mr. Weinshanker and told him I would not accept a lower salary. But I did not resign.

Again, these are all allegations and he said/he said, but the “playing chicken with idiots” line is already whizzing around the comics chat-o-sphere – especially among publishers who have not been paid since May. 

Ogilvie’s statement is less vivid, but it does contain one fun fact. Part of Sparkle Pop’s complaint is that a Diamond employee who later went to AENT sought to undermine New Diamond’s relationship with Amazon, proposing to introduce his Amazon rep to Alliance. This is not possible, says a defiant Ogilvie.   

In fact, there would be no need for any DCD employee to introduce AENT to Amazon. Amazon has been an AENT vendor for over 25 years and Amazon is one of AENT’s five largest vendors. Amazon was already a customer of AENT when I joined the company, then called CD Listening Bar d/b/a Super D, in or around 2001.

Take that! 

A lot of documents in this case are under seal – presumably because they contain trade secrets. One of them is the Transition Services Agreement between Sparkle Pop and Diamond. Another is the Diamond Employee Manual which has sections on confidential information etc. And also under seal, the “Diamond Six’s” exit interviews. 

Ironically, among the “trade secrets” that Weinshanker is concerned about are: “compensation data, customer lists and information, financial information, marketing strategies, contracts, pending projects and proposals, and vendor lists and information. The Employee Manual also contained a section about conflicts of interest.”

Why is this ironic? Diamond’s complete vendor list, and the home addresses of employees and certain compensation information for them is already public in the bankruptcy filings, as are piles and piles of financial information, lease information, and even some of their publisher contracts. I know for a fact that interested parties have already downloaded the list is Diamond vendors complete with names, addresses and emails. 

If you got this far you are one of the 25 or so people in the comics industry who are not sick and tired of this whole Diamond Bankruptcy Affair. Believe me, I am as sick of writing about it as you are of reading it. But this is just the gift that keeps giving. Although we’ve reached the messy lawsuits section of the program, there is yet more drama to be mined from all this. And still so many questions. 

After reading all this my main question is this: Why is Sparkle Pop/Ad Populum/New Diamond spending all this time on a punitive lawsuit over trade secrets in a business which, given their subsequent actions, they really aren’t interested in being in? It’s clear to any observer that New Diamond’s silence about their goals to publishers, comics shops and their remaining employees is by design. They may be silent about their core business, but when it comes to lawsuits, they have a lot to say.