Monday is a pretty big day for Diamond’s Chapter 11 filing. Quite a few motions will be heard, all of which have seen objections, filings in support, and back and forth of all of those! Yesterday saw a flurry of objections to the Ad Hoc Committee of Consignors’ motion to stay Diamond’s motion to approve its sale or other disposition of consigned inventory.

Diamond’s Objection:

1. Diamond filed an objection attacking the Ad Hoc Committee’s cited legal authority saying it doesn’t support their relief. Basically, the previous court case that the Ad Hoc Committee mentioned does say what they claim it does.
2. Diamond also emphasizes it is indeed their property to sell, something many have called into question.
3. Diamond states again that publishers didn’t file the proper paperwork stating the inventory is theirs.
4. Sparkle Pop’s email to publishers as to who owes what isn’t relevant.
5. There’s a swipe at a delay in an Ad Hoc filing with more cases supporting their case and then goes on to say the cases don’t support Ad Hoc’s case.

JPMorgan Chase filed a reply in support of Diamond’s motion for the sale. JPMorgan is the lender to Diamond and would financially benefit from the sale in that the money would go towards paying back the loan. Their filing pretty much comes down to “we get paid first and have an interest in this going through so we can get paid.”

They also filed a memorandum with points supporting their reply in support of Diamond. In it they state:

1. The publishers didn’t fill out the UCC paperwork in time.
2. The publishers have to prove that the creditors knew that the debtors were “substantially engaged in the sale of consigned inventory.”
3. Diamond can sell the inventory even if a “bona fide dispute” exists

JPMorgan concludes that the Ad Hoc’s argument is based on outdated decisions and “obsolete cases.”

Finally, the Official Committee of Unsecured Creditors also objected to the Ad Hoc Committee’s motion. They state:

1. Diamond’s motion shouldn’t be stayed because due process has been provided.
2. There’s been a lot of time but discovery requests were only recent.
3. Diamond is under financial constraints and the process has been sufficient.