Alliance Entertainment has a lawsuit against Diamond Comic Distributors, Comic Holdings, Comic Exporters, Diamond Select Toys & Collectibles, Raymond James & Associates, Getzler Henrich & Associates LLC, Robert Gorin, Charlie Tyson, and Dan Hirsch claiming there was fraud committed during the bidding process for Diamond’s assets. This is different than the general Chapter 11 process of Diamond’s or Sparkle Pop’s lawsuit against Alliance. They’re all related though.

At its heart, Alliance claims that the group “misrepresented the status of the Debtors’ relationship with Wizards of the West Coast,” the publisher of Magic: The Gathering. Alliance says that WotC made up of about 25% of Alliance Gaming (one of Diamond’s assets being purchased) revenue and that they conspired to get Alliance Entertainment to pay more than it was worth and on multiple occasions misrepresented Diamond and Alliance Gaming’s relationship with WoTC. In December 2024, WoTC said it wouldn’t renew its distribution agreement with Alliance Gaming. Chapter 11 was filed in January 2025. Alliance Entertainment said that it wasn’t until April that they were informed that Wizards of the Coast would not be renewing its distribution agreement and that Alliance had been attempting to verify that agreement well before but were denied by representatives of Diamond.

Multiple motions have been filed to dismiss counts II through V of the complaint:

II – Fraud
III – Aiding and Abetting Fraud
IV – Negligent Misrepresentation
V – Breach of Implied Covenant of Good Faith and Fair Dealing

There’s a lot more details as to the dealings between Alliance Entertainment and Diamond during the proceedings. The motion to dismiss goes through the Alleged Facts followed up by Legal Arguments as to why they should be dismissed with a lot of references to prior legal cases. The APA (the purchasing agreement) comes up in this case, it’s been highlighted in others, and Diamond and the defendants state there’s a clause that prevents claims “based upon extra-contractual statements or omissions.” Alliance Entertainment made its decision to end its bid, according to the new motion, after learning more details outside of the purchase agreement. Alliance Entertainment then wanted its deposit back but Diamond denied the allegations at which point Alliance Entertainment sued. The defendants call the lawsuit an “obvious play for leverage” to put pressure on Diamond to return the deposit.

In the response, Diamond and the defendants refute Alliance Entertainment’s claim that they attempted to hide the fact Wizards of the Coast was not extending its distribution agreement, calling it “100% false,” even claiming redactions, which Alliance points to as keeping key info from them, are a normal part of the process.

Diamond and the defendants go on to say the allegations by Alliance are vague and all tied together so if one claim falls apart, they all fall apart, it’s further reason it should be dismissed.

Here’s some of the new information out of the following:

• Alliance Entertainment felt the loss of Wizards of the Coast’s distribution agreement “warranted a downward adjustment of the APA purchase price in the range of $18-$25 million.”
• Alliance Entertainment’s original bid was $85.37 million in March
• Alliance Entertainment’s revised bid was $58.9 million also in March
• Diamond held a belief that Alliance Entertainment always was planning to back out of its bid
• In April Diamond told Alliance Entertainment that it was going to go with Universal Distribution and Ad Populum at which point Alliance Entertainment agreed to the original agreed upon price
• Alliance Entertainment’s deposit was $8.5 million

It’s all an interesting read about the back and forth, documents provided, redactions (and how that’s normal) and more. It reads more on technicalities and clauses in the purchasing agreements than an outright denial of obfuscation and fraud and the dismissals are really tied into parts of Alliance’s lawsuit that don’t stand on their own.

You can read all of documents below and there’s a lot to go over. We’ll still pouring over the details!