While there were rumors Diamond would be motioning to change their chapter 11 to chapter 7, the official motion has been filed to do so.

In their filing, Diamond describes things as “challenging cases.” As part of the process, Diamond took on financing from JPMorgan Chase Bank as a credit agreement which helped with financing and creating liquidity throughout the process. The latest financing agreement was extended to November 14 and since then, Diamond and JPMorgan held discussions for a further amendment to provide more financing through the process.

During that, JPMorgan said it was unwilling to finance Diamond further through the Chapter 11 process. During the December 8 hearing, Diamond informed the court it was going to convert to chapter 7 due to lack of funding. Diamond and JPMorgan did agree to short term and limited extension of their agreement to transition to the case to chapter 7.

In chapter 7, a court-appointed trustee sells the debtor’s non-exempt assets to pay off creditors allowing the debtors, in this case Diamond, to pay off their debts. A chapter 11 attempts to reorganize and continue the operations. The primary goal of chapter 7 is to liquidate and sell everything, cease operations, and distribute the funds. It also allows owners who personally guaranteed business loans to discharge those personal liabilities.

Diamond is now seeking an order to provide conversion to chapter 7 ” effective as of 11:59 p.m. on the fifth (5th) business day after entry of the Proposed Order.”

On January 14, 2025, Diamond filed and commenced chapter 11. In March, Alliance Entertainment won the bidding process to purchase Diamond’s assets for around $85.37 million. Diamond then states Alliance revised their bid after with negotiations between the two parties and due to lack of progress in those negotiations, Universal Distribution and Sparkle Pop won with their back-up bids. From there, litigation spun out involving Diamond, Alliance, and Sparkle Pop about the process with claims and counterclaims in court. Eventually after more drama, Universal and Sparkle Pop were approved as far as the sale in May 2025. That sale proceeds were used to “reduce the Debtors’ outstanding DIP Obligations.” On July 23, 2025 Diamond UK was sold and the sale was approved in August.

The big issue is inventory that Diamond still has from publishers. This is currently being litigated in separate lawsuits between Diamond and over 30 publishers.

The Debtors’ post-sale closing efforts have enabled the Debtors to recover additional value for the Debtors’ estates and to continue their efforts to monetize assets for the benefit of their creditors. At this point in time, the Debtors’ remaining assets are comprised of claims and causes of action, as well as a disputed interest in the inventory subject to the Consignment Sale Motion. These litigations are ongoing and contested, and further time, effort and expense will be required to bring them to conclusion. The Debtors and DIP Lender have each determined that, at this point in time, and without ongoing funding for the Chapter 11, these litigations can most efficiently be pursued in Chapter 7. In order to facilitate an orderly transition to that Chapter 7 proceeding, the DIP Lender, through the Eighth Stipulation, has agreed to provide funding to the Debtors so that certain of these transition expenses can be paid.

Diamond is looking for an “eighth stipulation” in its agreement with JPMorgan to convert the case to chapter 7 as well as approve the conversion to chapter 7. You can see the details of that below but it’s generally dates and process.

Diamond has also asked for an expedited hearing concerning the above.

In recent months, Diamond’s operating report filings have shown a massive amount of debt and and unknown way to clear it all. They’ve paid out over $12 million to those managing the process including lawyers and financial advisors. It’s unknown exactly how much Diamond owes to who and what assets remain that can be liquidated.

December 8 was the latest hearing when it came to Diamond Comic Distributor‘s chapter 11 process. The hearing was to address some disputes as to contracts and whether Diamond would accept or reject them. A group of publishers are pushing the issue in what would seem a play to get consigned inventory back as well as money owed them.

Diamond, and its lender JPMorgan Chase Bank submitted objections and opposition to the original motion highlighting that there’s been changes to the case since the motion was originally filed. Diamond and publishers are now in mediation when it comes to numerous issues, including consigned inventory, Diamond has settled some issues with Dynamic Forces/Dynamite Entertainment, money has been put aside for “administrative expenses” for the publishers, and controversies over consignment inventory sold by Sparkle Pop have been somewhat settled. Finally, Diamond has sued 32 publishers individually over the consigned inventory.

We’re still waiting for more details, if any, but for the most part the court heard the evidence submitted by parties with some issues being further examined with another hearing December 16 while other issues are being handled by the mediation currently going on.

While not the most exciting update, it moves the case further down the road and pushes the case out further into 2026. With concerns over Diamond’s liquidity and their latest monthly reporting having them with a net worth over negative $37 million, it’s hard to see how Diamond comes out of this with publisher satisfaction.

In January 2025, Diamond Comic Distributors filed chapter 11 leading to a dragged out fight on multiple fronts. One of those has been between Diamond and publishers over consignment stock Diamond has in its possession as well as some of that stock having been sold by Sparkle Pop as part of “new” Diamond. Ahead of a new hearing on the subject taking place December 8, Diamond as well as their creditor JPMorgan Chase Bank have filed objections, opposition, as well there have been witness and exhibit lists submitted by the parties involved.

The hearing involves a motion by the Consignment Group for Diamond to assume or reject contracts with its members. The Consignment Group consists of Aspen Comics, Black Mask Studios, DSTLRY, Dark Horse Comics, Dynamic Forces, Heavy Metal International, Magnetic Press, Massive Publishing, Oni-Lion Forge Publishing Group, Panini UK, Punk Bot Comic Books (Alien Books), The Penn State University (Graphic Mundi), Titan Publishing Group, and Vault Storyworks (Vault Comics).

In their objection Diamond really updates their previous one from August 15 as there have been developments over the months since the Consignment Group originally filed their motion.

Sparkle Pop is no longer selling consigned goods and the money gained by Sparkle Pop from the sale of goods by Sparkle Pop has been put into an account the court controls.

The next point they raise is that Diamond has filed adversary complaints against individual publishers after a previous court ruling concerning the sale of the consigned goods. Diamond’s concern is that this motion by the Consignment Group would get around those proceedings. If the court is in favor of the Consignment Group and compels Diamond to assume or reject contracts, Diamond states it’d have no choice but to reject the contracts, which would result in a termination of the contracts, and then the publishers would be able to get back their inventory. That would undermine Diamond’s complaints against each publisher which concerns the consigned inventory.

Diamond also has issues with the amount the publishers claim they’re owed, which is $675,069.95. The majority of that, $509,114.21 is owed to Dynamic Forces/Dynamite Entertainment which were satisfied in a previous deal between the them and Diamond. That leaves $165,955.74 which Diamond calls “modest in the scope of these chapter 11 cases.”

In news, Diamond claims it has paid members of the Consignment Group post-petition in excess of $1.8 million including the deal with Dynamic Forces to settle their matters. Those sales were post chapter 11 filing and from consignment sales, which Diamond can do. Diamond states what’s left are the “administrative claims” against Diamond and that Diamond is working towards paying those claims in full.

And finally, which is what we as reporters have been wondering about, the issue over the consigned goods has gone to mediation and currently being worked through to be resolved.

JPMorgan Chase Bank’s opposition is that there is currently negotiations going on regarding the disputes over the consigned inventory. Theirs is mostly a protective basis that allows them to supplement its legal arguments. JPMorgan reiterates Diamond’s argument that there’s other adversary proceedings between Diamond and the publishers regarding the inventory and this undermines all of that. They also point out that money has been deposited in an escrow account which will cover administrative claims when they’re settled. So, with things being handled in other ways, this needs to be rejected by the court.

Various lists of witnesses and exhibits have also been released.

The Consignment Group has filed their witness list for the hearing:

The Ad Hoc Committee of Consigners released their exhibit list:

JPMorgan Chase Bank’s witness list:

We’ve said for a while now the Diamond chapter 11 process is going into 2026. Today, an “evidentiary hearing” was held regarding three motions.

In evidentiary hearings, the sides involved present evidence such as witness testimony and documents to the judge presiding over the case. They’re used to focus on specific aspects of the case.

This evidentiary hearing involved:

• 679 Miscellaneous Relief
• 738 Objection
• 740 Opposition

All has to do with assuming or rejecting various contracts and fights between publishers, Diamond, and JPMorgan Chase Bank.

We don’t know the specifics of what was said, presented, or arguing in today’s hearing. All of the matters will continue on December 8, 2025. Not super exciting, but an update that things are still going on and will be for the foreseeable future.