We haven’t been updating the Diamond Bankruptcy much of late because there isn’t much to report….just more legal sludgery as various matters trudge along. Bills continue to rack up, of course, but most of the action, if you can call it that, has been behind closed doors.
This MIGHT have been an exciting week, as a hearing was scheduled for November 10th to go over the Consignment Dispute. However everything was kicked down the road to another hearing on December 8, most likely because all parties have agreed to mediation and are slogging it out there. A report on that process was also due by 11/7, but the report was uneventful:
1. Pursuant to the Mediation Order, the Hon. Thomas J. Catliota, Retired Bankruptcy Judge for the United States Bankruptcy Court for the District of Maryland, was appointed the Resolution Advocate.
2. The Resolution Advocate conducted a mediation of the Mediation Matters on October 28, 2025 and October 29, 2025 at the offices of Saul Ewing LLP, 1001 Fleet Street, 9th Floor, Baltimore, MD 21202-4359. Certain of the Parties and the Resolution Advocate continued to engage in Mediation calls following October 29, 2025.
3. As of the date of this report, certain of the Parties are continuing to discuss settlements.
From what we’ve heard, deals are being discussed, but it appears that most publishers have just moved on from this morass as best they can.
Old/Zombie/Diamond I filed their monthly operating report for September, as mandated, and there’s nothing much to report since the company doesn’t exist any more. The filings shows a cumulative $11,095,809 in fees to the various bankruptcy parties like Raymond James, Getzler Henrich & Associates and so on, with $4,730,936 racked up in September alone. Bankruptcy is expensive.
As for all the adversary proceedings – the lawsuits arising from the bankruptcy – mot much going on there either. New Diamond/Sparkle Pop’s suit against Alliance Entertainment – for stealing trade secrets – has been quiet, as has Alliance Entertainment’s suit against Diamond over their concealing the end of their contract with Wizards of the Coast. There was a filing to drop the counterclaims in the suit but just the outline gives you an idea:
I. ALL COUNTERCLAIMS SHOULD BE DISMISSED BECAUSE THE AENT APA RELEASED AENT FROM ANY LIABILITY UPON ITS TERMINATION OF THAT AGREEMENT
II. COUNTS I THROUGH V SHOULD BE DISMISSED BECAUSE THE DEBTORS FAIL TO ALLEGE THAT AENT BREACHED THE AENT APA
III. THE DEBTORS’ COUNTERCLAIM FOR DECLARATORY JUDGMENT SHOULD BE DISMISSED BECAUSE IT MERELY RESTATES THEIR AFFIRMATIVE DEFENSES AND IS REDUNDANT OF THE RELIEF SOUGHT IN THE COMPLAINT
IV. COUNTS III THROUGH V SHOULD BE DISMISSED AS DUPLICATIVE OF COUNT II
V. THE DEBTORS FAIL TO STATE A CLAIM FOR BREACH OF THE CONFIDENTIALITY AGREEMENT
VI. THE DEBTORS’ CLAIM FOR INJUNCTIVE RELIEF SHOULD BE DISMISSED
Basically a lot of legalese.
Then there is the SEPARATE lawsuit of Sparkle Pop vs Dynamite/Dynamic Forces, in which Sparkle Pop is suing for $1.7 million in storage fees, other business costs, and “grief” (not a legal term. Unsurprisingly, Dynamite/Dynamic has countersued! This is based on a fact much reported, that Dynamite had been trying to get Sparkle Pop to pay more then half a million dollars in money owed to them from selling Dynamite comics:
7. Dynamic received notifications and information related to the ongoing distributions of their consigned goods beginning May 15, 2025 through September 7, 2025.
8. During that time, Sparkle Pop refused to cease the unauthorized distribution of consigned goods, and further, refused to remit funds to Dynamic related to such sales.
9. The Bankruptcy Court entered a Consent Order dated September 12, 2025 to prevent further distribution of the consigned goods which were not sold to Sparkle Pop as part of the Asset Purchase Agreement.
10. Sparkle Pop has received payment for goods which it had no authority to sell and/or distribute.
11. Dynamic demands payment for consigned goods sold by Sparkle Pop since April 27, 2025 in the amount of $644,403.35.
Dynamite also denied all of Sparkle Pop’s claims via various classic legal doctrines, including statute of limitations, impossibility of performance, failing to state a claim upon which relief could be granted, unclean hands, failure to perform a condition precedent, equitable or promissory estoppel, waiver, laches, unjust enrichment and agreement and release.
Also:
14. Plaintiff’s claims are barred in whole or in part, as any damages alleged are the result of its own wonton or negligent conduct.
Take that!
I’m not a lawyer but: Dynamite is the only publisher that asked for a significant amount of money from New Diamond/Sparkle Pop, mainly because they were the only major publisher still being carried by Diamond. As I’ve heard from many sources, after May 15th, when Sparkle Pop took over Diamond, they kept selling comics (some of these comics consignment inventory which they did not have the right to sell), and just….didn’t pay publishers. Sparkle Pop’s complaint didn’t really lay out any evidence for the $1.6 million they claimed. Dynamite has lots of evidence for the sale of their books, including Sparkle Pop’s own records, although the money is being held in escrow until just who gets the consignment inventory is cleared up. So perhaps a bit of a nuisance suit.
If you ware still awake, that’s about all there is to report. But we’ll keep poring over those filings and if anything else happens, The Beat will have all the action.
