Update: JPMorgan and Sparkle Pop’s Time to Respond to Questions over their Interest in Diamond Inventory Extended
The Diamond chapter 11 process is now chapter 7 and with that, it creates a ripple across numerous related lawsuits. One such group of lawsuits involves JPMorgan‘s “Validity, Priority or Extent of a Lien or Other Interest in Property.” In question is inventory that Diamond has that is consignment goods provided by publishers. The goods are being held in a warehouse controlled by Sparkle Pop. It is before the court as to figure out who actually owns the inventory. Does Diamond, who can then sell it and pay back its creditors, like JPMorgan? Also, what claim does JPMorgan have as far as the inventory since the inventory was used as collateral by Diamond to get a loan?
The question concerns multiple lawsuits spanning multiple publishers with all of the various court documents similar. JPMorgan now has until February 16, 2026 to respond to this.
Update: Sparkle Pop‘s time to respond to the same complaint has also been extended to February 16. The order is below.
Original complaint example:
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How can a company use something they don’t legally own as collateral to get a loan?
Was it Geppi’s controlled Diamond that used it to get a loan or Chapter 11 Bankruptcy lawyer controlled Diamond?
That’s what’s being argued right now. Publishers said JPMorgan entered into the agreement knowing it’s consigned goods, so screw them, they can lose their loan due to that. JPMorgan and Diamond contend that a form had to be filled out to protect publishers and none of the publishers ever filed the paperwork, so they can do with it as they please.