Normally I file these updates on a Friday, but I have something else planned for tomorrow and….it has been a busy week with many important filings and motions! As I noted last week, things are HEATING UP on the “Who Gets The Comics?” question, and there will be a key hearing on March 26th to go over the publishers latest claims to Get Their Stuff Back. So we might be nearing some kind of clarity…..at last. IF you don’t want to wade through this, I have some new findings of my own at the bottom, so scroll on.
I’m going to link to the Graphic Policy coverage and filings for each of these and just try to give as plain an English summary where possible – but of course I can’t resist quoting the best parts of the filings so….enjoy!
- Trustee: There was no funny business! A few weeks back, Goodman Games filed a motion suggesting that the trustee in Diamond’s Chapter 7 case, Morgan J. Fisher, might have an undisclosed arrangement with a secured creditor to pay part of his expenses. This kind of arrangement is not unheard of but would need to be disclosed. Fisher fired back stating that the only agreement of this sort was an OLD one going back to the original bankruptcy filings: the secured lender (Chase Bank) had a lien on all of Old Diamond’s possessions with the SOLE exception that if Old Diamond got money from a lawsuit over the estate, they could share the proceeds 50/50 AFTER Chase was paid.
- High powered lawyers bail on the case: The Goodman motion came about after Fisher tried to hire a fancy law firm (Stearns Weaver) to handle this increasingly complicated case….and even filed several “pro hac vice” motions to get the Florida lawyers recognized by the Maryland bankruptcy court. But suddenly, on Sunday, Fisher filed a motion saying these good lawyers were withdrawing from the case for unspecified reasons.
Since the filing of the Stearns Weaver Application, circumstances have arisen that have caused Stearns Weaver to seek to withdraw as proposed bankruptcy counsel to the Trustee.
The Trustee is actively engaged in identifying and retaining qualified replacement counsel and special litigation counsel with the experience and resources necessary to serve as counsel in these complex chapter 7 cases.
Ah, to know the nature of these circumstances! I will note that there have been MANY MANY re-filings, and corrected filings in the case since the Chapter 7 started processing, giving the impression that everyone is flummoxed by this. Bring on the high powered, expensive lawyers.
- Boom makes their case! Boom filed their own separate motion to reclaim their consignment inventory making several claims for why They Need Their Stuff:
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- Boom had already terminated their distribution agreement with Diamond in DECEMBER 2024, before the bankruptcy filing, doubtless to prepare for their move to PRH after PRH acquired them.
- Like other consignors, they have not had access to their stock for months, have no idea how it is being stored, and it has adversely affected some of their later Kickstarter campaigns, which included consignment books as rewards.
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Now, with Boom’s Stock still being held hostage in 2026, they have not been able to ship these add-ons purchased by Kickstarter supporters, leading to a number of disgruntled customers and exposing Boom to legal claims for failing to deliver the products sold through Kickstarter.
- Sparkle Pop: We don’t know where all the comics are, anyway. Sparkle Pop, the purchaser of Old Diamond’s assets, and current renter of the Olive Branch warehouse where the contested inventory is being stored, filed their own motion in support of letting the 30+ adversary proceedings against the publishers play out, citing several reasons. While they don’t really care who owns the inventory, they say, they do have to store it so they are a concerned party.
Sparkle Pop does have serious concerns and a vested interest in the consigned goods to the extent that, among other things,
(a) rent/storage fees are in arrears and there is no guarantee that future rent payments will be made;
(b) no payments have been remitted to Sparkle Pop for its processing fees for goods that have been sold;
and (c) it will be an extremely expensive and time consuming process for Sparkle Pop to organize, pack and move the consigned goods to the loading docks for whomever (whether it be the Trustee or the Consignors) ultimately is determined to be the owner of the consigned goods.
They further state that no one (Diamond or consignors) has been paying for the storage of the $47 million in inventory since November. At the rate of approximately $125,000 a month they are already owed $500,000!
Also, shipping out all those comics will be a nightmare:
Finally, it will be a very cumbersome and expensive process for Sparkle Pop to make the consigned goods available for retrieval whether that be by the Trustee or the Consignors. This difficulty exists because, among other things, (a) the consigned goods are not organized by consignor; and (b) the consigned goods are not packaged or otherwise ready to be retrieved. The market rate for these types of goods to be “Picked and Packed” and moved to the loading docks for retrieval will ultimately depend on how the owners of these consigned goods want the goods to be staged.
Also, curiously, Sparkle Pop has not been paid for any sales made.
In addition, with respect to any sales that have been processed, Sparkle Pop is owed its processing fee in the amount of thirty-percent (30%).
But what sales might those be? Kind of a mini mystery there.
FINALLY, and just to throw yet another monkey wrench into the shit sandwich, Sparkle Pop is currently investigating whether they might be able to file a “warehouseman’s lien” under Mississippi law to get compensation for all the above! A “warehoueman’s lien”, Cornell Law School tells us, is
…a legal right granted to a storage facility or warehouse operator, allowing them to retain possession of goods stored on their premises until outstanding charges or debts for storage, handling, or related services are paid by the owner of the goods. This lien serves as security to ensure payment for services rendered. If the fees remain unpaid for a specified period, the warehouse operator may have the right to sell the goods to recover the unpaid amounts.
As you can see, the potential lien would be yet another roadblock for publishers to Get Back Their Stuff. BUT, as the publishers have been concerned about the state of the inventory, Sparkle Pop assures us:
As previously referenced, these consigned goods are being safely stored in Sparkle Pop’s possession at the Mississippi Facility.
One last little thing, as Graphic Policy notes, Sparkle Pop does not address the claims from the Consigners that they have been selling the inventory, as shown by an invoice for two copies of Megg and Mogg and 800 missing products for Living the Line.
FURTHER FINDINGS:
In addition to all the above, I’ve been poking around, and there is the matter of the appeal that the trustee filed to reverse the judge’s decision to deny the motion to get more time to accept or reject the consignment agreements.
Normally, an appeal would delay further legal proceedings. However, in the case of a bankruptcy…THIS IS NOT NECESSARILY THE CASE. Because the law expects that a bankruptcy should move swiftly (insert sobbing face emoji here,) appeals do not delay bankruptcy proceedings UNLESS the judge grants a stay. That might be another matter decided on the 26th.
Of all the most recent developments in the case, the one that caught my attention the most is trustee Fisher’s February 26th filing with a proposed settlement of the whole case: just sell all the inventory to Sparkle Pop! I’m told this proposal was met with “incredulity” by the consigners. I had much the same reaction. Why was it filed? I’m trying to find out.
Finally where does this all stand: Old Diamond (which at this point is just Steve Geppi as represented by the Trustee since the business is completely shut down) is desperate to get possession of that $47 million in inventory so they can (presumably) sell it to Sparkle Pop and pay off the last little bits of money they owe, including (i guess?) the storage fees to Sparkle Pop. BY the time this is all finished – the adversary proceedings won’t even go to court until 2027 – Old Diamond would probably just have to swap them for rent.
Meanwhile, there actually is a new Diamond! Namely Diamond Select Brands, a new business unit under Enesco (alongside Yankee Candle) that is selling toys from Medicom, Good Smile, Bandai and more. Retailers have recently been encouraged to set up accounts and order more toys. The spice must flow!
