Publishers to Sparkle Pop… What Consigned Goods are You Storing!? The Diamond Chapter 7 Drama Continues
While some think the drama concerning Diamond Comic Distributor‘s bankruptcy is wrapping up or over, there’s still a long way to go before this epic story ends. In early August, (old) Diamond Comic Distributors and its trustee Morgan W. Fisher announced a resolution and compromise with 15 publishers regarding consigned goods being held by Diamond and stored in a warehouse by Sparkle Pop.
(Old) Diamond had declared Chapter 11 and eventually Chapter 7 and in its possession was consigned goods from numerous publishers valued in the millions. There has been a fight for over a year where a little over 30 publishers had been fighting to get those consigned goods back. Diamond had been claiming it has a right to them and was going to sell them to pay off their debt. Sparkle Pop had purchased some of the assets of Diamond in the bankruptcy and that included taking over the warehouse where that product was being stored.
As part of the settlement, the 15 publishers can get their goods back and have to pay for the picking and packing of the inventory.
But… what the hell does Sparkle Pop still have in their possession!?
That seems to be at the heart of multiple motions today asking the court to help figure out what inventory remains in the warehouse.
In the motion, the publishers state that:
- Initially, Sparkle Pop reported sales only of inventory received after May 15, 2025.
- Even after Sparkle Pop reported sales of inventory received both before and after May 15, 2025, Sparkle Pop has not updated its court reporting with regard to inventory sales after October 2025.
- With regard to sales reported to this Court through October 2025, Sparkle Pop apparently applied a flat return rate as to each consignor. See, e.g., Sparkle Pop Report, attached hereto as Exhibit 1, illustrating the application of a flat return rate, and summary from Sparkle Pop, attached hereto as Exhibit 2. Sparkle Pop has never provided any detail as to what products were actually returned. See, Affidavit of Sparkle Pop Agent attached as Exhibit 3. Furthermore, some of the inventory sold was not returnable, and consignors have reported that they did not receive returned product (supporting the consignors’ allegation that Sparkle has reported returns that never, in fact, occurred).
- Sparkle Pop also may be continuing to sell inventory from the Warehouse. As recently as early 2026, one of the consignors received a report showing that inventory of another consignor being processed and removed from the Warehouse, despite Sparkle’s consensual agreement that any sales are prohibited by the automatic stay. See E-Mail from Drawn and Quarterly Books, Inc. attached as Exhibit 4.
The publishers have asked for the court to compel an inspection of the warehouse to audit the product that remains located there. They also want to use that inspection to corroborate the reports provided by Sparkle Pop. But, also raised is a “claim for conversion,” basically, is there further action publishers need to take because of actions by Sparkle Pop.
In July, the publishers submitted a subpoena to “Produce Documents, Information, or Objects or to Permit Inspection of Premises in a Bankruptcy Case” and in late July Sparkle Pop objected to that and the inspection. This created an unresolved dispute.
Sparkle Pop has made demands for the inspection to go through, which the publishers object to:
- Sparkle Pop’s sole right to designate the party permitted to conduct the inspection of the Warehouse and its requirement that any assistants be approved in advance;
- a requirement that the Trustee and Sparkle Pop enter into an agreement concerning payment of back rent owed at the Warehouse; and
- a requirement that the Ad Hoc Committee of Consignors solely bear Sparkle Pop’s claimed cost of the inspection, which Sparkle Pop currently quotes at $639.94 per hour – which fee includes an unexplained “thirty percent markup” and exorbitant compensation for what should be a single employee who accompanies the inspector. Originally the fee requested was $1,000 per hour and inexplicably included charges for Sparkle Pop’s tax and insurance payments for the Warehouse.
The publishers thinks those demands are unreasonable and unwilling to pay for the inspection, though they are being flexible in that if there’s a particular party Sparkle Pop doesn’t want in the warehouse, that can be accommodated. They refuse to give Sparkle Pop unilateral control over the process. They also point out that the payment for back rent owed is between Sparkle Pop and (old) Diamond, not the publishers.
The publishers are asking for the court to compel an inspection within 30 days of the service of the motion, that the individual committing the inspection be agreed upon, and Sparkle Pop will bear its own costs in related to the inspection.
The publishers that are part of this motion include 12 of the 15 (so far) that settled/compromised:
Ablaze
Action Lab
American Mythology
Avatar Press
Battle Quest Comics
BOOM! Studios
Fantagraphics
Green Ronin Publishing
Hermes Press
Living the Line
Paizo
Zenescope
You can read the filings below which also includes a look behind the curtain as far as inventory and discussion for this publisher. The overall motion is the same for each publisher while the inventory changes for each.
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