There’s many issues still to be resolved when it comes to Diamond’s Chapter 11 process. One is the interest in property, aka consigned inventory, aka product publishers sent to Diamond to sell.

In September, Diamond filed 31 complaints against publishers to determine who “owns” that inventory. The publishers want it back while Diamond wants to sell the inventory to raise money to pay back loans to JPMorgan Chase Bank.

Avatar Press wasn’t part of that initial 31 but that seems to have changed with Diamond filing a complaint with the court that reads like the previous ones filed.

In their filing they ask the court to declare that Diamond:

• it has an interest in the Defendant Supplied Consigned Inventory superior to the interest of the Defendant,
• the Debtor’s interest in the Defendant Supplied Consigned Inventory constitute property of the Debtor’s estate within the meaning of section 541(a) of the Bankruptcy Code, and
• the Debtors can sell or otherwise dispose of the Defendant Supplied Consigned Inventory pursuant to Bankruptcy Code section 363(b), without regard to the terms and conditions of the Agreement, free and clear of any alleged interest in the Defendant Supplied Consigned Inventory held or asserted by the Defendant pursuant to Bankruptcy Code section 363(f).

All of this was Diamond’s original argument to be able to sell the consigned goods, now they’re just making it at the publisher level instead of a blanket one for all. The questions are:

1. Is this serious and going to play out with the upcoming hearing regarding the publishers motion over consignment goods still coming?
2. Is this an attempt at leverage to try to get the publishers to settle and cut a deal with Diamond?

Check out the full complaint below: