With so many lawsuits going on when it comes to Diamond‘s chapter 11, it seems we’ve missed a bit one, Alliance Entertainment’s lawsuit against Diamond Comic Distributors for fraud during the initial bidding process for Diamond’s assets. The last we reported on this was August, so let’s catch up.

The last we left it, the defendants/debtors, were trying to get multiple complaints dismissed and filing counterclaims against each other.

In a lead up to a hearing the defendants submitted multiple replies to support their motion to dismiss some of the complaints. They rely heavily on the Asset Purchase Agreement that was part of the bidding process.

With filings to support those dismissals by other defendents.

There’s also filings to back up the arguments to not dismiss counterclaims.

Which all lead to a hearing and pretrial conference regarding all of this back and forth set for November 17, 2025.

But then Alliance got more filings in to argue for the dismissal of the counterclaim against it by Diamond also focusing on the Asset Purchase Agreement.

And why was all of the above rushed through? Because all of the motions by Diamond and its associates to dismiss the complaints by Alliance were denied! The reasons given were during the hearing and unfortunately that transcript hasn’t been released yet.

So, things continue… To kick off December, Alliance next filed a document responding to Diamond’s counterclaims against it. It’s a pretty standard document where they agree or disagree with facts stated in the counterclaim.

Which was followed up by defendant Raymond James & Associates, Inc.’s responses to Alliance’s complaint about fraud. The only thing that really pops up from that is that they admit information provided to the bidders was redacted, which is part of the whole case.

Followed by responses by Charlie Tyson, Dan Hirsch, and Getzler Henrich & Associates, LLC regarding Alliance’s complaint.

So what does all of the above mean? The complaint from Alliance against Diamond and its associates over fraud moves forward as well as their counterclaim back that Alliance broke the contract it agreed to.

While this week has been focused on Diamond’s Chapter 11 hearings, there’s other lawsuits that are orbiting the Diamond Chapter 11 saga. There were two filings in that court case which involves the claim by Alliance Entertainment of fraud by Diamond during the bidding process for Diamond’s assets. Alliance was the winning bid at one point (then they weren’t, then they were again, then they withdrew their bid and weren’t again). They withdrew their bid claiming “fraudulent misrepresentation” by Diamond where they didn’t disclose their relationship with Wizards of the Coast who were ending their distribution deal with Alliance Games (different company than the bidder Alliance Entertainment).

Diamond filed to dismiss the lawsuit by Alliance Entertainment against Diamond Comic Distributors but Alliance has responded to that. Alliance lays out six points, 28 cases, and 2 rules to make their point. It’s a Counterclaim to Diamond’s Counterclaim.

It dives deep into the cases but also goes over the basic facts from Alliance’s perspective of the bidding process for Diamond’s assets:

1. On January 14, Diamond filed chapter 11, and Raymond James & Associates was hired to commence a sale process for all or substantially of Diamond’s assets;
2. Raymond James set of a Virtual Data Room featuring 2,145 documents for purchasers and what Alliance calls “limited information.” There’s a distributor agreement between WOTC and Alliance Games from December 8, 2021 and a second amendment dated January 1, 2025 but the expiration dates of the agreement are redacted;
3. Alliance Entertainment singed a confidentiality agreement on October 2024 which means Diamond was planning on a sale at least 3 months before they declared chapter 11;
4. On February 11, 2025, the Court entered an order setting a deadline for bids;
5. Alliance submitted a bid of $51,559,450 which included an assumption of certain liabilities but excluded certain adjustments;
6. Alliance wired a depost of $3.6 million;
7. On March 21, 2025, Raymond James notified Alliance it was conditionally approved as a Qualified Bidder but did not meet certain requirements and could not be approved;
8. After an extension and revisions, on March 23, 2025, Alliance was notified it was a Qualified Bidder;
9. The auction for Diamond was held on March 24 and March 25;
10. At the end of the auction, Alliance’s bid of $72,2450,000 was determined to be the highest and “best” bid;
11. Diamond demanded changes and Alliance agreed to pay $85.37 million for Diamond’s assets;
12. Diamond then said it would seek approval of the backup bid by Universal Distributors and Ad Populum which was then filed on April 5 which was a “lesser value” than Alliance’s bid;
13. Alliance filed an adversary proceeding and motion for an injunction to stop the sale;
14. Alliance’s challenge was successful and they were declared the winner;
15. Alliance increases its deposit to $8.5 million;
16. Alliance was to by $85,368,053 at that point with $61,613,309 in cash due at closing with the closing date no later than 5pm ET on April 25.
17. On April 12, 2025 (the document says 2024) Alliance gets an unredacted copy files and discovers the distribution agreement with WOTC expired on December 31, 2024 and was then extended to March 31, 2025. A third extension was produced that extended it to April 30, 2205. That was signed on March 12 by Diamond and WOTC on April 1;
18. Alliance Entertainment has now discovered Alliance Games’ relationship with WOTC isn’t what they thought and Alliance Entertainment sees that as a “material adverse change” to the assets;
19. Diamond’s counsel calls Alliance’s counsel stating WOTC’s distribution agreement ends on April 30. The call happened on April 17;
20. Alliance attempts to negotiate an adjustment to their purchase price reflecting the loss of WOTC revenue but Diamond “refused to meaningfully engage”;
21. On April 23, Alliance informs the loss of WOTC would reduce Alliance’s revenue by 25% and “fundamentally alters” the economic projections and Alliance wants a discussion on the impact and necessary amendments to the agreement. If there’s no resolution, Alliance would terminate the purchase agreement on April 24, 2025 at 4pm;
22. Diamond didn’t engage in discussion so the deal was terminated stating that Diamond’s “breach was incurable” and claiming “fraud.” They also wanted the release of their deposit.
23. On June 4, 2025 (the filing says 2024), Diamond sent their own letter terminating the agreement which had technically been void since April 2024.

An omnibus opposition to the defendant’s partial motions to dismiss the complaint was also submitted. It lays out 7 arguments for their case along with 54 cases and 1 rule knocking down the defendant’s (which is more than Diamond) reasons they think things should be dismissed.

Both are a lot of legalese and court cases but it’s all an interesting read with a more laid out timeline as to what happened with Alliance’s bid for Diamond’s assets.