The Game Manufacturers Association Objects to Diamond’s Consignment Liquidation Plan
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, and most recently a joint filing by 13 publishers have each filed objections to the motion.
Now, the Game Manufacturers Association (GAMA) on behalf of Skyscraper Studios, Roll for Combat, and Liminal Esports, aka Snowbright Studio, have submitted its own objection to the motion.
GAMA takes the stand that the consigned goods are not the property of Diamond, a pretty consistent statement in objections. They’ve taken the pretty recent argument made by Humanoids, and the 13 publishers, that the publishers are not subject to Article 9 and thus did not need to file UCC-1 to protect their goods, part of Diamond’s claim. They also repeat that there are obligations in the agreements between Diamond and the publishers and if they’re not met, then it’s a “material breach.”
Much like the most recent filings, who “owns” the goods hasn’t been determine and that needs to be determined GAMA argues and an “adversary proceeding” being required.
New is that Diamond needs to fulfill their obligations under the agreements between them and the publishers and that by failing to do so would be a “material breach.” If Diamond sells the goods in this liquidation plan it’d be a violation of the agreements and any contracts that are rejected need to be approved by the Court in the bankruptcy.
GAMA goes into more detail on “administrative expense priority claims” that would be owed to the creditors, aka publishers. Since the merchandise was acquired after they declared Chapter 11, the consignors are entitled to “administrative expenses” since they helped Diamond stay afloat and conduct business after they filed.
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