Publishers have been filing objections to Diamond Comic Distributor‘s motion that would allow them to sell, liquidate, dispose of, inventory it currently still has. Many publishers have already been vocal about the motion and many have responded to our inquiries with “no comment” because it’s an ongoing legal matter. So far, TwoMorrows Publishing, Magma Comix, and Graphitti Designs, Abstract Studio, NBM, William M. Gaines, Agent, Inc., Humanoids, a joint filing by 13 publishers, and GAMA have each filed objections to the motion.

Now, the Ad Hoc Committee of Consignors has filed their own objection to the motion. The Ad Hoc Committee of Consignors is a group of creditors that has formed to represent the interests of those who provided goods to the debtor. In other words, this group represents publishers and others who Diamond owes money.

The Ad Hoc Committee takes a bit of a different approach. They state Diamond’s claim on the stock is false. That in Diamond’s initial motion they “wrongly frame the context.” Diamond claims the consigners have a “competing interesting in the stock.” The Ad Hoc committee says there’s no competing interest, they OWN the stock and Maryland law says the stock is the consignors’, aka publishers. And because it’s not Diamond’s stock, they shouldn’t be able to sell it.

Some of the argument is what we’ve seen in other objections, but this goes into a bit more detail about this particular aspect.

Some of that detail includes specifics in the agreement like intellectual rights, Diamond’s failure of payments negated the contracts but the biggest…

NOWHERE DOES DIAMOND SAY WHAT STOCK IT INTENDS TO SELL!

This is a question we’ve had and when talking to publishers, it was clear they had the exact same question.

Interesting, the Ad Hoc Committee points out that consigned goods are not part of the borrowing base in Diamond’s credit agreement. It’s all technical but an argument we haven’t seen others made.

Like other objections, it dives into what consignment actually is and that the merchandise Diamond has doesn’t require the UCC-1 form to be filled out to protect it and is part of Diamond’s original motion.

But, the Ad Hoc Committee doesn’t stop there as they state “there are other defects in the motion.”

1. Diamond doesn’t identify the bidding process or what stock is being sold;
2. The sale would impact royalty payments and create losses for the consignors in addition to what they’d lose in the stock;
3. It’d depress the market for that stock since Diamond would have sold it so cheap;
4. Consignors may seek termination of the agreements so the stock should be returned if they do;
5. Basically, Diamond wants to sell other people’s property which will harm the owners which is not allowed in chapter 11 which is to be “governed by principles of equity and fairness.”

Read the full filing below, it’s massive: