Last week, the court released their decision as to what to do about Sparkle Pop having sold consigned inventory when they shouldn’t have during Diamond’s chapter 11 process.  It was a rather open and shut case in a general sense, so it was all about the details with this one as to how it needed to be resolved. The court decided:

1. Sparkle Pop needs to stop all sales, marketing, and advertising of the goods held on consignment. Sparkle Pop has said they’ve already stopped, so this one was pretty open and shut. Sparkle Pop still needs to file a written Certification to the court that it has complied.
2. Sparkle Pop needs to provide to Diamond and to two of the groups representing some publishers a detailed account, certified by an officer of Sparkle Pop, that has the name of the vendor who provided the product, the name and title of the product, the SKU, and other identifying information, the gross sale proceeds received, the quantity sold and date sold, and the manufacturer’s retail price of the product.
3. Sparkle Pop needs to pay the gross proceeds of the sale of the consigned inventory into the Registry of the Court. It’ll be held by the court until other decisions have been decided. If any other money comes in due to this, that’ll be turned over too.
4. The TSA and APA Sparkle Pop agreed to is still in force.
5. Diamond’s move for damages included attorneys’ fees and costs related to the recovery will be heard at a later date.
6. JPMorgan Chase Bank’s claims and liens when it comes to the consigned inventory isn’t impacted by this.

Sparkle Pop has submitted their paperwork that certifies they have stopped selling the consigned inventory and removed it from the website and marketing.

I hereby certify that Sparkle Pop has removed all Consigned Inventory (as defined in the Order) from its (and/or any affiliate of Sparkle Pop’s) website, order forms, marketing materials and all other forms of product marketing and sales materials as of the date of the Consent order;

Sparkle Pop has ceased all sales of Consigned Inventory as of the date of the Consent Order.

Earlier this week, there was a hearing regarding Sparkle Pop‘s sale of consigned inventory they shouldn’t have been selling brought forth by Diamond as part of their chapter 11 drama. While the actual hearing was resolved it seems rather quickly, we’ve been waiting for the official order with the details as to what the court decided. It was a rather open and shut case in a general sense, so it was all about the details with this one.

You can read the full filing below after the summary of what the court had to say.

1. Sparkle Pop needs to stop all sales, marketing, and advertising of the goods held on consignment. Sparkle Pop has said they’ve already stopped, so this one was pretty open and shut. Sparkle Pop still needs to file a written Certification to the court that it has complied.
2. Sparkle Pop needs to provide to Diamond and to two of the groups representing some publishers a detailed account, certified by an officer of Sparkle Pop, that has the name of the vendor who provided the product, the name and title of the product, the SKU, and other identifying information, the gross sale proceeds received, the quantity sold and date sold, and the manufacturer’s retail price of the product.
3. Sparkle Pop needs to pay the gross proceeds of the sale of the consigned inventory into the Registry of the Court. It’ll be held by the court until other decisions have been decided. If any other money comes in due to this, that’ll be turned over too.
4. The TSA and APA Sparkle Pop agreed to is still in force.
5. Diamond’s move for damages included attorneys’ fees and costs related to the recovery will be heard at a later date.
6. JPMorgan Chase Bank’s claims and liens when it comes to the consigned inventory isn’t impacted by this.

None of the above is surprising, it really came down to where the money would be held.

There’s a lot of balls in the air when it comes to Diamond‘s chapter 11 process. Wednesday, September 10 is the next hearing, this one having to do with Sparkle Pop having sold consignment goods when they weren’t supposed to.

The short version, Diamond still has a lot of inventory in its possession that are on consignment. Diamond wants to sell the inventory to raise money so it can pay back its lender, JPMorgan Chase Bank. But, publishers don’t want them to and have filed been fighting to stop their motion. During that, it was revealed that Sparkle Pop had sold a bunch of the goods on consignment when they shouldn’t have.

Diamond filed a motion at the end of August to force Sparkle Pop to stop selling the inventory and also asking for some sort of damages. Sparkle Pop has said they have stopped selling the inventory and have the money set aside and waiting to be told what to do with it by the court and blamed Diamond for the issues. Then, there’s publishers who have some issues with Diamond’s motion against Sparkle Pop. Diamond released its witness and exhibit list as well as took at some shots at Sparkle Pop’s filing.

Now, ahead of the hearing which takes place today, Sparkle Pop has released its own witness and exhibit list.

While it doesn’t name any specific individuals, Sparkle Pop has stated it reserves the right to call:

1. any person listed or called as a witness by any other party;
2. any person necessary to establish the authenticity or admissibility of exhibits;
3. (any person for purposes of impeachment; and
4. any person for purposes of rebuttal.

That could change though as things play out.

The exhibit list has much of what we’d expect like the various agreements Sparkle Pop agreed to when it purchased Diamond’s assets but there’s a few items that do stand out.

• May 27, 2025 Email from Diamond Comic Distributors to Vendors regarding VENDORS Important Update on Outstanding Invoices and Future Payments
• Sparkle Pop document production in response to Subpoena, Bates stamped SP000001-SP000079

So, there’s some email that went out from Diamond to vendors regarding invoices and payments, most likely clarifying who is responsible for what after the purchase but there might be more. Also, there’s document production and who knows what might be in there.

You can check out the full filing below:

There’s a lot of balls in the air when it comes to Diamond‘s chapter 11 process. Wednesday, September 10 is the next hearing, this one having to do with Sparkle Pop having sold consignment goods when they weren’t supposed to.

The short version, Diamond still has a lot of inventory in its possession that are on consignment. Diamond wants to sell the inventory to raise money so it can pay back its lender, JPMorgan Chase Bank. But, publishers don’t want them to and have filed been fighting to stop their motion. During that, it was revealed that Sparkle Pop had sold a bunch of the goods on consignment when they shouldn’t have.

Diamond filed a motion at the end of August to force Sparkle Pop to stop selling the inventory and also asking for some sort of damages. Sparkle Pop has said they have stopped selling the inventory and have the money set aside and waiting to be told what to do with it by the court and blamed Diamond for the issues. Then, there’s publishers who have some issues with Diamond’s motion against Sparkle Pop.

In the lead up to Wednesday’s hearing, Diamond has released its witness and exhibit list and responded to Sparkle Pop’s objection to the whole thing. And Diamond responds with some big swings and drops some emails.

In its reply, Diamond doesn’t mince words calling Sparkle Pop’s objection “self-serving misdirection.” They mock Sparkle Pop’s framing that it was “trying to do the right thing for all parties.”

In their response they say Sparkle Pop’s objection doesn’t explain and leaves out:

• The purchase agreement provided Sparkle Pop reimbursement for the cost and expenses in connection to the consigned inventory when the sales were at the direction of the debtors.
• Diamond is paying Sparkle Pop for the storage of the consigned inventory and instead says Sparkle Pop criticized Diamond for “failing to remove such consigned inventory.”
• The consigned inventory is distinguishable from the “owned” inventory by the coding system that was handed over to Sparkle Pop by Diamond when Sparkle Pop purchased Diamond’s assets.
• Sparkle Pop has provided information as to what consigned inventory was sold showing it knows what is consigned inventory.
• Sparkle Pop didn’t respond to Diamond’s demand to stop selling the consigned goods and hand over all of the proceeds to Diamond. Nine emails were sent that are part of the exhibit filed with this motion.
• Sparkle Pop asked Diamond if the consigned inventory should be included on its website and ignored the response by Diamond’s counsel to remove the inventory from the website.
• Sparkle Pop never told Diamond it was segregating the proceeds from the sale of consigned inventory.
• Sparkle Pop doesn’t seem to get the impact of the automatic stay that’s in place concerning consigned goods.

It also highlights some agreements:

• Sparkle Pop has stopped selling the consigned goods.
• The proceeds from the sale should be held but there’s disagreement as to who should manage it until it’s decided what to do with it.
• The inventory should be removed from Sparkle Pop’s website.

Diamond feels that the court should still tell Sparkle Pop to stop selling the inventory and remove it from their website and marketing materials. The gross proceeds should be handed over to Omni Agent Solutions which is managing already as an escrow agent connected to funds dealing with the sale process. Finally, Diamond will figure out damages at a later date.

The emails are interesting and reveal some new info, but also seem to be missing responses from Sparkle Pop:

• Sparkle Pop was late in some of its payments owed to Diamond
• Sparkle Pop put forth a scenario where it would purchase the consigned goods but Diamond thought it was too low.
• From May 16 to July 8 $1,353,364 was the amount of sales of consignment inventory.
• After that amount there was an additional $31,258.60 sold for a total of $1,384,622.60.
• There was disagreement of who would pay customs of goods shipped before purchase but didn’t get through customs until after.
• “I am following up since we never heard back from you after our conversation last evening. Have you had an opportunity to discuss our proposal with your client?” <- What was this proposal about?

Wednesday should be an interesting one!