While there has been hints in various previous motions that this would happen, multiple motions have been filed requesting discovery in Diamond‘s Chapter 11 case.

What is Discovery?

Discovery is a process that generally takes place pre-trial where the parties exchange information and evidence relevant to the case. Examples are emails, slack messages, text messages, documents, and more.

This is a pretty big deal in that it forces Diamond to reveal internal emails, documents, and other communication regarding various aspects of the Chapter 11 case. The parties that requested this will go through the material collected and provided to find relevant information. Basically, it’s a request for evidence regarding the case and there have been multiple of them.

• Around July 31, Dynamic Forces had the first request. In it, they requested Diamond produce documents as well as answer questions regarding Dynamic and Dynamite‘s fight over payment and merchandise.

• Around August 5, the group representing Aspen, Black Mask Studios, DSTLRY, Dark Horse, Dynamic Forces/Dynamite, Heavy Metal, Magnetic Press, Massive Publishing, Oni-Lion Forge Publishing, Panini UK, Punk Bot Comics/Alien Books, Titan Publishing, and Vault Comics sent a similar request also asking for documents as well as answers to questions.

• Around August 5, a subpoena to testify directed to Sparkle Pop was served to their counsel and on August 6, a request was sent to Diamond to product documents as well as answer questions, this from the Ad Hoc Committee of Consignors.

• Finally, around August 8, GAMA, which is helping Skyscraper Studios, Roll for Combat, Liminal Esports, and Snowbright Studio asked for documents as well as sent a set of questions like the previous but also sent a list of facts they hope Diamond agrees to (an example would be how much stock Diamond accepted).

All four of these are big deals because it forces Diamond to turn over material that may hurt their case when it comes to their want to sell items on consignment and even what Diamond may owe the publishers. We don’t know what specifically was asked for but it could be slack messages, email, internal documents, etc.

The next steps are:

1. Diamond has to pull all of the documents and communications requested and figured out what is privileged (conversations with their lawyer) and what is not;
2. Hand it over to each of the groups that made the requests;
3. Assuming there’s no disagreement over privilege, the requestors would then need to go over every document and conversation for details and see what’s relevant and helps their case;
4. From there, we might see hearings, testifying, motions, and maybe some of the documents requested in filings.

This is a big deal in that it forces Diamond to show their hand in a way and arms the creditors in their fight to get paid and their stock returned. They’re going on offense and this is a big part of that. There could be something to help their case or their could be nothing. We may never know the answer to that. It’s an escalation in the case that’s well worth watching.