Diamond was looking to get answers this week for their motion regarding consigned products. But, it looks like things did not go the way they wanted with a partial win for publishers but a more precarious situation for all.

One of the motions being considered was a motion by a group of publishers to compel Diamond to assume or reject contracts with them. That motion has been pushing off for a hearing to be held on September 30. On that date, Diamond’s motion to sell the consigned goods will also continued to be discussed along with various objections.

Notice of Hearing (related document(s)[747] Motion to Compel filed by Creditor Dynamic Forces, Inc., Creditor Aspen MLT, LLC /a/ka Aspen Comics, Creditor Black Mask Studios, LLC, Creditor DSTLRY Media, Inc., Creditor Heavy Metal International, LLC, Creditor Magnetic Press, LLC, Creditor Massive Publishing, LLC, Creditor Oni-Lion Forge Publishing Group, LLC f/k/a Oni Press, Creditor Panini UK, Ltd., Creditor Punk Bot Comic Books, LLC a/k/a Alien Books, Creditor The Penn State University a/k/a Graphic Mundi, Creditor Titan Publishing Group, Ltd., Creditor Vault Storyworks, LLC a/k/a Vault Comics f/k/a Creative Mind Energy, Creditor Dark Horse Comics, LLC). Hearing scheduled for 9/30/2025 at 01:30 PM. In person hearing Courtroom 9-D Baltimore, Judge Rice. (Scott, Cherita)

Evidentiary Hearing Held by Video Conference: re: 531 Motion to Sell Free and Clear of Liens and Notice of Motion – MOTION STAYED; re: 679 Motion for Miscellaneous Relief AND re: 738 Objection AND re: 740 Opposition – ALL MATTERS ARE CONTINUED TO 09/30/2025 01:30 PM IN PERSON at Courtroom 9-D, Baltimore – Judge Rice.(related document(s) 531 Motion to Sell Free and Clear of Liens and Notice of Motion, 598 Objection, 601 Objection, 602 Objection, 603 Objection, 606 Objection, 611 Objection, 612 Objection, 653 Response, 679 Motion for Miscellaneous Relief, 728 Response, 730 Response, 738 Objection, 740 Opposition, 743 Line ) (Scott, Cherita)

So, publishers get a further day in court to make their case and Diamond’s motion is being pushed off to then too with their original consignment motion “stayed.” It’s a slight win for publishers but puts Diamond in a more difficult spot.

This is a BIG deal. There has been references that Diamond is running out of money with costs to operate still as well as costs of their advisors and lawyers they have for the Chapter 11 process. Diamond’s loan from JPMorgan matures on August 23 and it was raised in filings Diamond needed the consignment approval to help pay that back/know what’s next with that and JPMorgan’s filings on the subject basically saying “we get paid first.” Now, the consignment money isn’t guaranteed and they only have the sale of Diamond UK approved this week which brought in $2.1 million. It’s also another month to pay lawyers and financial management and a lot of work to be done, so potentially a lot of billable hours.

Transcripts hint the judge seems to be irritated at Diamond and JPMorgan, especially Diamond’s inability to keep their records straight. We’ve seen in released transcripts this issue raised multiple times and has been an issue for months. Diamond was threatened with turning their Chapter 11 into Chapter 7 due to it. They’re currently a month behind their required financial reports with June’s filed about a week ago.

In the August 5 hearing, The Court stated the following when talking about the want of discovery which would potentially delay the proceedings:

I’m concerned that the last hearing and recent hearings that this — the Debtor and these Estates are in potentially administrative insolvency jeopardy, and I’m not sure whether the Debtor and the Court have the luxury of waiting 90 days or 120 days for discovery.

Apparently the court wasn’t concerned enough because there’s now a month delay for decisions and potentially more discovery during that. Discovery is going forward, it would seem, and that’s a potentially costly process for those involved in both gathering documents as well as going through the documents.

Also, there are the actions of Ad Populum. Diamond has said they’ve been selling consigned goods without permission and without purchasing them. Image’s settlement with Diamond allows Diamond to now pursue Ad Populum for any money gained from the sale of Image’s goods. Will other publishers turn their sites on Ad Populum too? Ad Populum has been trying to get their CEO Joel Weinshanker to not testify in the case.

In discussions with certain Objectors, the issue of whether the Debtors are continuing to sell consigned inventory today has been raised. So, I want to be very clear for the record that the Debtors are not currently selling consigned inventory, and they have not sold any consigned inventory since the closing date of the sales of substantially all assets to the two purchasers, Universal and Sparkle Pop. The Debtors have become aware of the fact that Sparkle Pop, one of the purchasers of some of the Debtors’ assets, has been selling consigned inventory on or after May 16th. The Debtors promptly notified Sparkle Pop, both the principals at Sparkle Pop and Sparkle Pop’s counsel, to immediately stop any sales as to the consigned inventory because consigned inventory was explicitly excluded from the acquired assets under that APA.

The Debtors have sent several written communications to Sparkle Pop’s counsel and have verbally informed both the principals at Sparkle Pop and their counsel that they’re not to be selling the consigned inventory, that it’s in violation of the APA, and the Debtors have demanded that the proceeds of any such sales be remitted back to the Estates. Sparkle Pop has yet to respond to the Debtors’ various outreach. However, the Debtors are aware of the issue. We’re not hiding the ball there. The Debtors continue to raise this issue with Sparkle Pop and will continue to take the appropriate action to recover amounts realized by Sparkle Pop from the sale of any inventory on or after May 16th. So, this has been a topic in the informal discussions. The Debtors have provided information on this topic as it has been requested to the objection — to — as it has been requested by the objecting parties. So, we’re aware of it. We’re working to resolve it. We’re providing the information relating to that issue as it’s requested.

There’s now even more pressure on Diamond to settle with publishers to put this all behind them and move on to get this over. There’s already delays in Diamond submitting their final plan for chapter 11, and that won’t get settled until next year based on the current timeline. There’s also an “everyone loses” scenario and Diamond goes from chapter 11 to chapter 7 which makes it even more difficult for publishers to get paid what they’re owed (and it’s already going to be difficult based on the current financial situation of Diamond).

We’ll have more info on today’s proceedings when there is more released.