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Dynamic and Diamond’s Agreement and Diamond’s Chapter 11 Heading to Dispute Resolution Approved

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Friday delivered two orders from the court in the case surrounding Diamond’s chapter 11 process.

Last week, we brought the news that Diamond, the Official Committee of Unsecured Creditors, JPMorgan Chase Bank, the Consignment Group, the Ad Hoc Committee of Consignors, and Sparkle Pop all agreed to send multiple issues in Diamond’s chapter 11 process to the Court’s Bankruptcy Dispute Resolution Program.

Instead of a bunch of hearings were lawyers argue it out. Everything this presented to a judge who quickly makes a decision. A decision is expected to be made by October 29, 2025.

The approval by the court also gave the Resolution Advocate the “same immunity he has as a judge under federal law and common law from liability for any act or omission in connection with the mediation and from compulsory process to testify or produce documents in connection with the mediation.”

The other order was a deal between Dynamic Forces and Diamond concerning their issue over administrative expenses Dynamic felt it was owed by Diamond. That is resolved with “old” Diamond. Dynamic Forces fight with “new” Diamond is ongoing.

Dynamic Forces/Dynamite and “old” Diamond Come to an Agreement. Fight with “new” Diamond Continues

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Dynamite Entertainment

The drama regarding Diamond’s chapter 11 process seems to never end and has twists and turns worthy of a great soap opera. In May, Dynamic Forces, aka Dynamite filed a motion to get some of the money it felt it was owned by Diamond. Since Diamond’s chapter 11 filing in January 2025, Dynamic/Dynamited delivered $509,114.21 worth of goods they hadn’t been paid for. It motioned the court to be paid for that as well as administrative expense.

There’s also issues with goods being sold by “new” Diamond, we don’t know how much of Dynamite’s, as well as the ongoing issues regarding consigned inventory that “old” Diamond wants to sell to help pay back some of its loan to JPMorgan Bank.

Dynamic/Dynamite and “old” Diamond have come to an agreement when it comes to some of their issues being fought out currently in court. The new “consent order” would resolve some of the motion Dynamic/Dynamite filed “seeking the entry of an order granting the allowance and requiring payment of an administrative claim.”

The agreement between the two companies proposed is:

  1. Dynamic’s claims against Diamond for goods sold up to May 15, 2025 are “satisfied in full by setoff through the satisfaction in full of the Dynamic Forces Revolving Loan Agreement/Promissory Note (the “Note”) dated on or about April 14, 2015; which Note shall be deemed satisfied in full.
  2. Claims for goods sold on or after May 16, 2025 (when “new” Diamond began) are to continue. In short, “old” Diamond is off the hook while “new” Diamond has proceedings still going on against it.

This comes after “new” Diamond’s owner Ad Populum/Sparkle Pop filed a lawsuit against Dynamic/Dynamite seeking over $1.7 million for breach of contract and looking for reimbursement for expenses. That was filed in mid-September.

Diamond’s Chapter 11 Disagreements Heads to a Bankruptcy Dispute Resolution Program

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Diamond Comic Distributors

There’s a lot of matters remaining to be settled when it comes to Diamond’s Chapter 11 process. One of the big ones is the matter of contracts between Diamond and publishers and consigned inventory. Recently, Diamond filed over 30 lawsuits regarding that particular issue, each a specific publisher. In an interesting twist, instead of everything playing out in a costly and protracted legal fight, the various parties have agreed to submit matters to the Court’s Bankruptcy Dispute Resolution Program.

Diamond, the Official Committee of Unsecured Creditors, JPMorgan Chase Bank, the Consignment Group, the Ad Hoc Committee of Consignors, and Sparkle Pop have agreed to submit the following matters:

  • Motion Seeking Entry of an Order Requiring the Debtors to Assume or Reject Executory Contracts with Members of Ad Hoc Committee of Consignors; and For Related Relief [D.I. 679] (the “Ad Hoc Committee Motion”);
  • Motion Seeking Entry of an Order Requiring the Debtors to Assume or Reject Executory Contracts with Members of the Consignment Group; and For Related Relief [D.I. 747] (collectively with the Ad Hoc Committee Motion, the “Consignors’ Motions”);
  • Debtors’ Motion (I) to Enforce the Automatic Stay, (II) To Enforce the Sale Order, and (III) Granting Related Relief [D.I. 784] (“Stay Motion”), to the extent the relief requested was not resolved in the Consent Order Resolving, in Part, Debtors’
  • Motion (I) to Enforce the Automatic Stay, (II) to Enforce the Sale Order, and (III) Granting Related Relief [D.I. 878] (the “Consent Order”);
  • Any and all claims related to the Consent Order, including, but not limited to claims raised in the Stay Motion and any objections or responses thereto;
  • The adversary proceedings commenced by the Debtors against members of The Consignment Group and the Ad Hoc Committee (the “Adversary Proceedings”);
  • Any administrative expense claims asserted by members of The Consignment Group or the Ad Hoc Committee;
  • Any causes of action under chapter 5 of title 11 of the United States Code against members of The Consignment Group or the Ad Hoc Committee;
  • Any and all claims related to the proceeds deposited by Sparkle Pop with the Court Registry pursuant to the Consent Order; and
  • Any other related claims or causes of action between the Parties.

The group has requested that Hon. Thomas J. Catliota, a Retired Bankruptcy Judge for the United States Bankruptcy Court for the District of Maryland, serve as the advocate and have it all completed by October 29, 2025.

What’s even further interesting is that Diamond is opening this up to any vendors who are not part of any of the above parties to participate in the mediation process.

The above issues are some of the major ones and would potentially settles issues regarding ownership of inventory which then would allow Diamond to proceed to the next steps such as drafting an actual plan. It should speed up the process overall instead of it dragging out for months, which Diamond nor publishers want over concern Diamond is running out of cash.

October is going to be a spicy month it turns out!

Diamond Submits a New Motion to Extend its time to file a Chapter 11 Plan to January 2026

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Diamond Comic Distributors

In September, Diamond submitted its second motion to push its due date for its chapter 11 plan to October 29 with 90 days after to solicit votes, which would be December 29, 2025. It was decided to be due October 15 with the solicit period ending on December 15. Now, Diamond has submitted a third motion that guarantees this will go into 2026 as we expected.

The third motion would have the chapter 11 deadline pushed to January 13, 2026 and then a 91 day window to solicit votes which would put it at March 16, 2026.

With one day to go, it’s likely it’ll get pushed out yet again. The reasons provided are the same listed before:

It’s a complex case involving four jointly-administered Debtors with over 1,000 creditors and $80 million in debt;

  • Diamond has made “good faith progress”;
  • There’s still the consignment sale issue to deal with;
  • Diamond is paying bills as they come in;
  • There’s a plan coming and they need more time to monetize their assets;
  • It’s only been nine months…;
  • Diamond doesn’t believe this will “pressure creditors.”

What isn’t mentioned is the growing concern that (old) Diamond is actually insolvent, a concern being raised by its creditors and we’d expect to see some response raising that fear.

Sparkle Pop Updates the Court on the Status of its Consignment Sale Proceeds During Diamond’s Chapter 11 Process

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Steven Bieg, the Chief Financial Officer of Ad Populum which is the parent entity to Sparkle Pop has provided an update as to the status of money gained through the sale of consigned inventory they weren’t supposed to.

For those who don’t know the details, during Diamond’s Chapter 11 process there’s bunch of consigned inventory. That inventory is under dispute by Diamond and the publishers of that product. After its purchase of Diamond’s assets, Sparkle Pop had sold some of that consigned inventory. Diamond then took Sparkle Pop to court to get a court order for them to stop, they said they already had, and a decision to be made as to what to do with the money. The decision was the proceeds were to be paid into the Registry of the Court and would be held until other disputes have been decided.

Sparkle Pop had generated sales of $1,051,575 before May 15, 2025 and $515,866 after May 15, 2025, a total of $1,567,441.

In the update, Bieg states some of the sold product has been returned. There’s also the fact that payment schedules have varied so paying it all is rather difficult since Sparkle Pop hasn’t been paid for it all.

As of September 5, 2025, Sparkle Pop had processed returns of Consigned Inventory received before May 15, 2025 representing $316,926 in total sales. Accordingly, as of September 5, 2025, Sparkle Pop had collected $778,171 in proceeds net of returns in connection with sales of Consigned Inventory received before May 15, 2025, or approximately 74% of the total amount invoiced and returned.

On September 17, Sparkle Pop deposited $778,171, the amount they’ve collected, to the Court Registry.

As of the date of the Supplemental Declaration, the amount of returns of Consigned Inventory received before May 15, 2025 that Sparkle Pop has processed has grown to $337,975 in total sales.

As of the date of this Supplemental Declaration, and since September 5, 2025, Sparkle Pop has collected a total of $812,416 in proceeds from the sales of Consigned Inventory received before May 15, 2025, or approximately 84% of the total amount invoiced net of returns.

On October 10, Sparkle Pop sent a check for $34,246. That makes the total deposited with the Court Registry, $812,417.

The Consignment Group Submits a Limited Objection Regarding Diamond’s Memphis Warehouse Plan

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The legal representation for publishers have been standing up in recent months in regards to Diamond’s Chapter 11 process. Yesterday, the Ad Hoc Committee filed an objection concerning Diamond’s motion for entry of an order to approve it agreement regarding its Memphis warehouse. Now, the Consignment Group has followed up with a limited objection of their own.

The Consignment Group represents multiple publishers: Aspen, Black Mask Studios, Dark Horse Comics, DSTLRY Dynamic Forces aka Dynamite Entertainment, Heavy Metal International, Magnetic Press, Massive Publishing, Oni-Lion Forge Publishing Group, Panini UK, Punk Bot Comic Books, LLC aka Alien Books, The Penn State University aka Graphic Mundi, Titan Publishing Group, and Vault Storyworks aka Vault Comics.

Their limited objection echoes the Ad Hoc Committee’s citing concerns over Diamond’s solvency.

The motion shows shrinking equity in Diamond’s monthly operating reports, something we’ve been regularly reporting on.

Again, like the Ad Hoc Committee, the Consignment Group feels that the payment shouldn’t be made until protections have been put in place to “ensure a ratable distribution among all similarly situated administrative claimants in the event of administrative insolvency.”

The Ad Hoc Committee of Consignors Objects to Diamond’s Deal Regarding its Memphis Warehouse with Further Concerns over Diamond’s Solvency

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Not So Fast

The legal representation for publishers have been standing up in recent months in regards to Diamond’s Chapter 11 process. They’ve filed multiple objections to motions with the latest by the Ad Hoc Committee concerning Diamond’s motion for entry of an order to approve it agreement regarding its Memphis warehouse.

In October, Diamond filed an order to pay money owed to the company that owns the warehouse property, AIRETT, with over $450,000 of it going towards taxes Diamond didn’t pay but AIRETT did. Over $500,000 would be paid out in total.

In their filing, the Ad Hoc Committee states that Diamond reached out to them before filing the motion. They informed Diamond then that they felt that “such a settlement of the dispute between the Debtor and the Landlord must be approved after motion, notice to all parties in interest, and the other protections afforded to parties in interest under Bankruptcy Rule 9019.”

In short, there’s a lot of parties that are owed money and it needs to be sorted out before Diamond drops half a million dollars over its lease.

The filing dives deep into Diamond’s monthly operating reports raising concerns that Diamond owes a lot and doesn’t have a lot of assets.

At this time, the last monthly operating report that Diamond Comic Distributors, Inc. (“Distributor Debtor”) filed indicates that there are total postpetition payables of $9,596,504, of which over $4.7 mm are past due, with total postpetition payables recorded as $10,047,876, along with $604,284 of priority debt. The total assets are reported as being $10,837,210, but the vast majority of assets reflected on the MOR are comprised of receivables of $9,333,980, with no aging report or other indication of how collectible the receivables are.

Accordingly, it is questionable (if not most likely) that the Distributor Debtor is administratively insolvent. The Committee members, along with dozens of other similarly situated consignors, are owed money for postpetition sales by the Debtor and also by the Debtor’s purchaser, some or all of which claims are entitled to administrative priority.

They think that any money due to the landlord should be paid out when decisions are made about what the publishers and others receive and not before.

Diamond Submits a Complaint Against Avatar Press increasing Complaints Against Publishers to 32

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Avatar Press

There’s many issues still to be resolved when it comes to Diamond’s Chapter 11 process. One is the interest in property, aka consigned inventory, aka product publishers sent to Diamond to sell.

In September, Diamond filed 31 complaints against publishers to determine who “owns” that inventory. The publishers want it back while Diamond wants to sell the inventory to raise money to pay back loans to JPMorgan Chase Bank.

Avatar Press wasn’t part of that initial 31 but that seems to have changed with Diamond filing a complaint with the court that reads like the previous ones filed.

In their filing they ask the court to declare that Diamond:

  • it has an interest in the Defendant Supplied Consigned Inventory superior to the interest of the Defendant,
  • the Debtor’s interest in the Defendant Supplied Consigned Inventory constitute property of the Debtor’s estate within the meaning of section 541(a) of the Bankruptcy Code, and
  • the Debtors can sell or otherwise dispose of the Defendant Supplied Consigned Inventory pursuant to Bankruptcy Code section 363(b), without regard to the terms and conditions of the Agreement, free and clear of any alleged interest in the Defendant Supplied Consigned Inventory held or asserted by the Defendant pursuant to Bankruptcy Code section 363(f).

All of this was Diamond’s original argument to be able to sell the consigned goods, now they’re just making it at the publisher level instead of a blanket one for all. The questions are:

  1. Is this serious and going to play out with the upcoming hearing regarding the publishers motion over consignment goods still coming?
  2. Is this an attempt at leverage to try to get the publishers to settle and cut a deal with Diamond?

Check out the full complaint below:

Objection Filed Over Payment to Counsel in Diamond’s Chapter 11 Due to Fear of Insolvency

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For much of Diamond‘s chapter 11 process, lawyers, counsel, and more have submitted filings for payment for their work with little fanfare. The filings and payments are in the millions at this point over the 9 months of the process. Now, things are shifting as objections are being filed over the motions with one coming today.

The Consignment Group has submitted a limited objection over the final order for the third monthly fee application of Stephenson Harwood LLP, Special Counsel to Diamond.

In the motion, the Consignment Group makes it clear they don’t object to the compensation but the fact the payment would be immediate.

The Consignment group states “there exists a substantial risk of administrative insolvency in the Debtors’ cases.” In short, Diamond might run out of money and can’t pay anyone it owes.

Instead, the Consignment group feels the final award shouldn’t be paid immediately without protections in place “to ensure a ratable distribution among all similarly situated administrative claimants in the event of administrative insolvency.”

In short, they want to make sure that all of Diamond’s money doesn’t go to lawyers and consultants and the creditors, aka publishers, should be getting some of what they’re owed too. There has been a growing concern, even expressed by Diamond itself, that they won’t be able to make it through this process without running out of money.

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