The legal representation for publishers have been standing up in recent months in regards to Diamond’s Chapter 11 process. They’ve filed multiple objections to motions with the latest by the Ad Hoc Committee concerning Diamond’s motion for entry of an order to approve it agreement regarding its Memphis warehouse.

In October, Diamond filed an order to pay money owed to the company that owns the warehouse property, AIRETT, with over $450,000 of it going towards taxes Diamond didn’t pay but AIRETT did. Over $500,000 would be paid out in total.

In their filing, the Ad Hoc Committee states that Diamond reached out to them before filing the motion. They informed Diamond then that they felt that “such a settlement of the dispute between the Debtor and the Landlord must be approved after motion, notice to all parties in interest, and the other protections afforded to parties in interest under Bankruptcy Rule 9019.”

In short, there’s a lot of parties that are owed money and it needs to be sorted out before Diamond drops half a million dollars over its lease.

The filing dives deep into Diamond’s monthly operating reports raising concerns that Diamond owes a lot and doesn’t have a lot of assets.

At this time, the last monthly operating report that Diamond Comic Distributors, Inc. (“Distributor Debtor”) filed indicates that there are total postpetition payables of $9,596,504, of which over $4.7 mm are past due, with total postpetition payables recorded as $10,047,876, along with $604,284 of priority debt. The total assets are reported as being $10,837,210, but the vast majority of assets reflected on the MOR are comprised of receivables of $9,333,980, with no aging report or other indication of how collectible the receivables are.

Accordingly, it is questionable (if not most likely) that the Distributor Debtor is administratively insolvent. The Committee members, along with dozens of other similarly situated consignors, are owed money for postpetition sales by the Debtor and also by the Debtor’s purchaser, some or all of which claims are entitled to administrative priority.

They think that any money due to the landlord should be paid out when decisions are made about what the publishers and others receive and not before.