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Diamond’s Trustee Morgan W. Fisher and some Publishers Reach a Settlement over Consigned Goods

Posted on August 5, 2026 by Brett

It’s a hell of a new comic book day as court documents have been released as to a settlement between Diamond‘s trustee Morgan W. Fisher and a group of publishers concerning consigned goods being held by Diamond and Sparkle Pop.

To catch folks up, when Diamond declared bankruptcy, it held a large quantity of product in its warehouse that was on consignment. After some time, Diamond claimed it had a right to sell the consigned goods to help pay down its debt and that nothing would go to the publishers. The publishers claimed it was their property and that when Diamond declared bankruptcy it triggered a whole bunch of different things that would allow them to get their product back. This has gone on for about a year and a half that resulted in all sorts of off-shoot lawsuits and a lot of behind-the-scenes negotiations.

To make things even more complicated, some items were sold when they weren’t supposed to. Sparkle Pop, the company that took over “old” Diamond, deposited $840,151.00 into an account of which $669,410.00 represents sales of goods from the Consignment Group. In addition, Sparkle Pop has $417,496.00 for sales after May 15 2025 through February 13, 2026 of which $273,503.00 represents sales of the Consignment Group’s goods. Of that initial amount of the $669,410, $50,000 will go to the publishers with $619,410 going to the trustee but what is in escrow and owed to the other publishers not part of this group needs to be figured out and settled. The $273,503 will go entirely to the trustee. If it’s found Sparkle Pop sold even more than what’s known, the publishers need to pursue that at their own cost and 5% of any recovery from that would go to the Diamond trustee after expenses for the legal proceeding are handled.

Now, we have a resolution, a “compromise,” and from the cursory read, it seems like it’s pretty much what we expected the result to be.

The compromise in short is that a certain group of publishers will get some money for the product of theirs sold and will be able to get the product back but they’ll need to pay for packing and shipping. The compromise is similar to a deal cut between Image and Diamond (the money is the difference between the two).

What’s also big is that it terminates any distribution agreement that currently exists for these publishers with “old” Diamond. This in particular stands out:

The Trustee agrees and acknowledges that the Consignment Group Members were the owners of their respective Consignment Inventory at all times prior and subsequent to the Petition Date, and the TSA did not permit or authorize Sparkle Pop to sell, distribute or dispose of Consignment Inventory on behalf of either the Consignment Group members or the Debtors other than in accordance with the Distribution Agreements and at the Debtor’s sole and express direction.

Publishers that are part of the compromise:

Ablaze
American Mythology
Avatar Press
Battle Quest Comics
Action Lab

Drawn & Quarterly
Fantagraphics
Green Ronin Publishing
Hermes Press
Living the Line

Paizo
UDON Entertainment
Zenescope
BOOM! Studios
Dynamite Forces/Dynamite

There are some publishers who are noticeably missing from this list and have been participating in court proceedings up to this point.

The bullet points of key parts of the deal and we’ve put in bold the major ones:

The Court Registry Escrow not allocable to the Otherwise Represented Consignors shall be released to the Parties and distributed as follows: (a) Fifty Thousand Dollars ($50,000.00) to the Consignment Group Members that are also members of the Ad Hoc Committee (to be allocated as it/they deem appropriate); and (b) the remainder to the Trustee (thus, the net amount to be paid to the Estates is $619,410.00).
The Settling Parties shall jointly move the Bankruptcy Court for an order directing that Sparkle Pop release the aggregate amount allocable to each Consignment Group Member from the SP Escrow, as set forth on Schedule 3 to the Trustee.
If not already rejected, all Distribution Agreements of the Consignment Group Members shall be deemed rejected as of the Effective Date of the Settlement and terminated in their entirety.
The Consignment Group Members will have the authority and are required to retrieve any and all of their inventory from the Warehouse, bearing their own costs of picking and packing such inventory.
Sparkle Pop is entitled to pick and pack the inventory identified by the Consignment Group Members, at rates comparable to what the Consignment Group Members can obtain from other third parties to complete the work. If Sparkle Pop declines to do the pick and pack work at comparable rates, the Consignment Group Members are authorized to access their Consignment Inventory and remove it from the Warehouse under the timelines set forth in the Settlement.
The Trustee, on behalf of himself the Debtors, releases and discharges the Consignment Group Members from any and all claims, causes of actions, obligations, and damages including, but not limited to, preference claims. Similar releases from the Consignment Group Members flow to the Trustee and Estates, subject to certain claims as described herein and in the Settlement. In other words, the releases are essentially mutual.
The Consignment Group Members are reserving all rights with regard to any additional claims against Sparkle Pop. In the event any Consignment Group Member recovers additional funds from Sparkle Pop on account of unauthorized sales of or shortages in the Consigned Inventory in excess of the Court Registry Escrow and SP Escrow, such Consignment Group Member shall pay five percent (5%) of any such recovery to the Estates, net of any legal fees and expenses required to collect such amounts.
In the event Sparkle Pop obtains a judgment against any Consignment Group Member for rent, storage, or similar charges with respect to such Consignment Group Member’s Consigned Inventory stored at the Warehouse, that Consignment Group Member shall have an Administrative Claim against the Estates in an amount equal to 25% of such claim.
In the event Sparkle Pop or the Consignment Group Members obtain a finding that any consignment inventory delivered by any Consignment Group Member was unreported as being sold by the Debtor prior to the Settlement, but was in fact sold by or at the Debtor’s direction, and paid to or for the benefit of Debtor, the respective Consignment Group Member(s) that delivered any such Missing Inventory shall be entitled to a chapter 7 administrative claim against the Debtors that is subordinate to certain other expenses and claims including any finally-allowed post-conversion administrative claims of Sparkle Pop, JP Morgan Chase and/or the Trustee’s professionals.
Within sixty (60) days after the Effective Date, the Trustee will file a notice of abandonment pursuant to Bankruptcy Code § 554 as to the Consigned Inventory.
Within ten (10) days after the Effective Date, the Trustee shall assign to the Consignment Group all of his rights, title, and interest, without representation or warranty of any kind, in and to the CG Adversary Proceedings as plaintiff therein.
Within ten (10) days after the Effective Date, (i) the Trustee will file a notice of dismissal of the Denial Order Appeal (if not already resolved), and (ii) the Members of the Consignment Group, as applicable, will file a notice of dismissal of the CG Adversary Counterclaims.

But… there’s more!

The Consignment Group Members are entitled to file a “substantial contribution claim” for their legal fees and costs having to do with this fight.

Other consignors who are not part of this settlement as settling parties have to reach a resolution with the Consignment Group Members and its counsel on a fee and expense sharing arrangement. But, the Trustee and other consignors who are not part of this agreement could reach their own settlement.

What’s big, and why we thought there would be a settlement, it ends Sparkle Pop charging “old” Diamond and its trustee in what’s described as a “burdensome administrative cost.”

The Parties believes the Settlement is in the best interest of the Estates. It eliminates a burdensome administrative cost that is being asserted by Sparkle Pop with regard to the continued storage of the Consignment Inventory at the Warehouse; it relieves the Trustee from any further involvement in the CG Adversary Proceedings of the Settling Parties and the Appeal; it provides a substantial cash infusion to the Debtors’ Estate; and it protects the Consignment Group Members from further erosion of value of their Consignment Inventory as well as prevents the flooding of the market with respect to unauthorized sales of their inventory.

You can read all of the documents below and we’ll have more as this major decision unfolds:

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Expeditors International of Washington gets its Administrative Expenses Approved in Diamond’s Chapter 7 Case

Posted on June 5, 2026 by Brett

It’s been rather quiet when it comes to Diamond‘s chapter 7 process. Our alerts have been filled up with notices of returned mail… and not much else. But, today saw a little bit of news with one order approved by the court.

Expeditors International of Washington has had its administrative expense claim approved. There was no objections to the motion according to the approval. Expeditors International of Washington is a logistics company.

The company will receive their claim amount of $266,855.15.

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Diamond Chapter 11

The Ad Hoc Committee Officially Gets its Time Extension while Creditor Expeditors International of Washington are Given Instruction in Today’s Diamond Chapter 7 Update

Posted on April 27, 2026 by Brett

Two updates have come in today (so far) for Diamond’s Chapter 7 process…

The first, and easiest, is the Ad Hoc Committee of Consignors‘ request to extend the time they could respond to recent motions by Diamond’s Trustee has been approved. The Ad Hoc Committee was able to respond on or before April 24 at 12:00pm ET…

And they did!

You can read their full response here.

The second update is an intriguing one and concerns money owed. Creditor Expeditors International of Washington is seeking $266,855.15 in payment. The court has instructed them to get the right filing in to make that happen looking for a “memorandum that explains the legal and factual justification for such a request.”

Court Instruction – Expeditors apparently seeks both (i) allowance of a Chapter 11 administrative expense claim in the amount of $266,855.15, and (ii) IMMEDIATE PAYMENT OF THAT CLAIM BY THE CHAPTER 7 TRUSTEE. If Expeditors actually seeks immediate payment, it must file by May 15, 2026 a supplemental memorandum that explains the legal and factual justification for such a request under the circumstances of this case; otherwise, the immediate payment request will be denied. (related document(s)[1229] Application for Administrative Expenses filed by Creditor Expeditors International of Washington, Inc.). Responses due by 5/15/2026. (McKenna, Shannon)

Creditor Expeditors International of Washington is a logistics company. In February 2026, their motion for administrative expense was denied by the court. You can see that document below. They had originally filed for the amount but the Trustee was not yet appointed for the case to be served with the request. This is more an administrative bump, so we’ll see if there’s an official, updated request and of course, it’s more money that’s being asked of Diamond.

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Diamond Chapter 11

Diamond Trustee Morgan Fisher and the Ad Hoc Committee Release their Exhibit and Witness Lists Ahead of April 27 Hearing

Posted on April 24, 2026 by Brett

The Ad Hoc Committee of Consignors and Diamond Trustee Morgan Fisher have released their exhibit and witness lists ahead of the hearing scheduled for April 27. The hearing will focus on recent motion by the Trustee for loans from JPMorgan Chase Bank to continue litigation related to Diamond’s bankruptcy.

Fisher’s filing is pretty focused featuring just the order to authorize the borrowing of money from JPMorgan Chase and the use of cash collateral as well as an asset purchase agreement between Diamond and Alliance Entertainment from April 2025. The witness list includes three individuals Morgan Fisher, David Shuster, and Robert L. Patrick.

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The Ad Hoc Committee of Consignors exhibit list teases a focus on Diamond’s finances and they may call Morgan Fisher, the Trustee handling Diamond’s chapter 7 case. Included is Sparkle Pop’s offer to purchase the consigned stock from Diamond for $1 million and a transcript of Robert Gorin (which we’ll be diving into further).

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Diamond Chapter 11

The Ad Hoc Committee of Consignors Objects to Diamond’s Trustee’s Motion to Borrowing from JPMorgan Chase Bank

Posted on April 24, 2026 by Brett

As expected, the Ad Hoc Committee of Consignors has submitted a motion objecting to Diamond’s Trustee Morgan W. Fisher‘s motion asking to borrow a limited amount of money from JPMorgan Chase Bank and to use cash collateral.

In their motion, the Ad Hoc Committee states their reasons line up with the objections submitted by Alliance Entertainment earlier int he week.

The Ad Hoc Committee goes further stating that Fisher had the opportunity in December 2025 to reject the contracts Diamond could no longer afford and resolve outstanding litigation. Instead, Fisher has chosen to “double down” and “seek costly financing to employ a team of professionals to pursue litigation claims.”

They point out that the financing does nothing beyond adding additional administrative burden on Diamond in the hope of recovering consigned stock that would only benefit JPMorgan Chase Bank.

The Ad Hoc Committee goes further with a pretty blunt point:

With no employees, lapsed insurance policy with no insurance on the stock, a growing rent obligation to its purchaser of non-consignment stock, and no way to distribute the consigned stock, the Debtor has proposed no viable mechanism by which it could distribute stock at a cost that permits it to cover the cost of the proposed financing and additional rent and insurance charges in so doing. In other words, the Debtor has no hope of distributing any stock; it cannot afford to store and insure the stock; and yet it wants to borrow more money from its lender so that the lender can get paid 100% of whatever the Debtor recoups from a liquidation that would decimate the value of the property.

They go on further focusing on the consigned goods which are still in question highlighting in the distribution deal, Diamond is entitled to 10% of the MSRP of the sale of consigned stock but are now trying to get 100% of the proceeds to pay their lender.

But going back to the Trustee’s plan…

Fisher laid out three avenues to gain revenue if the loan from JPMorgan is approved, with litigation being a few of them. Though it’s the plan, Fisher doesn’t go into the likelihood that any of the litigation succeeds. There could be more debt incurred through this plan with no gain from it at all. There’s also no timeline which means no projected further cost to Diamond as well as if there is success, the cost of distributing the consigned goods.

As is, Sparkle Pop offered $1 million to purchase the consigned stock but four months have passed and the cost to rent the warehouse by Diamond is currently $576,000 with $144,000 per month. The amount they’d have to pay in storage outweighs the possible benefit of selling it. With warehouse rent owed on the stock, the lack of insurance, and more, the Ad Hoc Committee emphasizes that Diamond is in violation of its agreements to hold onto the stock. They also state they have an administrative claim if Diamond is able to sell the stock.

With all of that, the Ad Hoc Committee argues that borrowing money from JPMorgan to fund litigation isn’t in Diamond’s best interest and is only in the interest of JPMorgan who Diamond owes about $7 million.

You can read the full motion below.

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Diamond Chapter 11

Diving into Diamond Trustee Morgan W. Fisher’s Debtor Financing Motion

Posted on April 10, 2026 by Brett

Yesterday, we kicked off going over a flurry of filings concerning Diamond‘s chapter 7 case. The first we went over was a surface level look at trustee Morgan W. Fisher‘s motion for new financing from JPMorgan Chase Bank. JPMorgan Chase Bank was the bank originally providing the “debtor in possession” financing during Diamond’s chapter 11, in short providing a loan that allowed them to operate through the process.

Fisher is asking the court to enter a new DIP credit agreement. There’s some interesting nuggets from the motion. Here’s some highlights:

WHEREAS, all obligations of the Debtors under the DIP Loan Documents became automatically due and payable in full on the Maturity Date of December 29, 2025. The Debtors’ failure to pay such obligations in full resulted in Events of Defaults under the DIP Loan Documents.

WHEREAS, on March 10, 2026, the DIP Lender filed its proof of claim No. 27 asserting its rights, claims, liens and interests under the DIP Loan Documents and the Final DIP Order (the “JPMorgan Proof of Claim”). In the JPMorgan Proof of Claim, the DIP Lender asserts the current outstanding amount owing from the Debtors to the DIP Lender under the DIP Loan Documents is not less than $6,579,473.92 in the aggregate, with interest, costs and attorneys’ fees continuing to accrue, pursuant to the terms and conditions of the Final DIP Order and the DIP Loan Documents.

Technical Amendments of Final DIP Order and DIP Credit Agreement and Reinstatement of DIP Credit Agreement. The DIP Credit Agreement is reinstated, effective upon the Bankruptcy Court’s approval of this Stipulation. The Maturity Date under the DIP Credit Agreement is extended through and including June 30, 2027. The Maximum DIP Facility Amount is increased to and including $8,200,000. All references in the Final DIP Order, the DIP Credit Agreement and the DIP Loan Documents to the Debtors/Borrowers shall be deemed amended to include the Trustee as the authorized Borrower under the DIP Credit Agreement. Following return of the Letter of Credit (as defined in the Final DIP Order), the DIP Lender is authorized to draw and apply the funds securing the Letter of Credit to the outstanding indebtedness under the DIP Credit Agreement without further order of the Court.

The Trustee Borrowings are capped at $766,000.00 in new advances, plus such further uses of cash collateral as are authorized under the Stipulation, not to exceed the Maximum DIP Amount of $8,200,000 (“Trustee Borrowing Cap”).

While the need for more money for the chapter 7 process is news enough. The full filing goes deep into the reality of where things stand as well as where Fisher thinks there’s money to be gained in the chapter 7 process.

The Trustee currently has cash on hand of approximately $340,000.00 in his controlled trustee accounts. Additional funds in the approximate amount of $150,000.00 are held in JPMorgan bank accounts that may be subject to competing third party claims and disputes.

Part of the change from a chapter 11 filing to chapter 7 filing for Diamond was concerns that funds were drying up for Diamond to continue to function and JPMorgan not interested in extending a loan. As mentioned above, Diamond still owes JPMorgan $6,579,473.92 from their original DIP agreement. We get a sense of some of where things stand currently for Fisher when it comes to cash on hand. $340,000 is not a lot, especially when one newly hired consultant in the case will cost a minimum of $700,000 for ongoing litigation (more on that later) and the mentioned amount owed by Diamond to JPMorgan alone. We wonder if there’s accounts not “controlled” by the trustee beyond what’s held by JPMorgan. The wording gives me pause and seems very specific.

So, where is the money to pay off these creditors going to come from? Strap in, because there’s a lot laid out here.

Alliance Litigation Payment Waterfall

Fisher has a lot of confidence in litigation involving Alliance Entertainment. Kramon & Graham, P.A. is being proposed as the “Special Litigation Counsel” and focused on the litigation regarding Alliance Entertainment.

The Trustee believes that the Debtors have viable defenses to the Alliance claims and that the estates have viable, significant claims against Alliance. The Trustee believes that the potential recovery for the Debtors’ bankruptcy estates in the Alliance Litigation could be significant.

Kramon & Graham, P.A. will be paid a flat fee of $700,000 and then 25% of the gross recovery exceeding $2.8 million up and above the $700,000. So, if Kramon & Graham got $3 million in the case, they’d get an additional $50,000.

How much are we talking here? How about over $30 million.

In the Alliance Litigation, the Debtors asserted, (and the Trustee intends to pursue), counterclaims seeking approximately $30 million on damages from Alliance, which include the release to the estates of an $8 million deposit in escrow. Given the complexity, scope, and potential value of the Alliance litigation, the Trustee proposes to retain, subject to Court approval, Kramon & Graham, P.A. (“K&G”), specifically attorneys Jean Lewis and David Shuster, as special litigation counsel to prosecute the estates’ claims in the Alliance Litigation.

That’d be $6.1 million for Kramon & Graham, P.A.? We’ll go through the Alliance documentation again and report exactly what the counterclaim damages are (the $8 million is easy to figure out) but the back and forth between Diamond and Alliance Entertainment has gone on for close to a year now and pretty crazy with accusations. Today, new rulings as far as confidentiality and a protective order were dropped. We’ll also be following up on that.

But, if they got that $30 million, who would it go to? Fisher lays that out in his motion which you can see below.

3.1 Alliance Litigation Payment Waterfall. If the Alliance Litigation is concluded and/or Settled in whole or in part, then, the distribution of any Alliance Proceeds remaining after payment of any unpaid portion of the K&G Flat Fee, any amount due to K&G for the K&G Contingency Fee, and any unreimbursed and authorized K&G Expenses shall be made as soon as practicable, and allocated as follows:
(i) First, to repayment of all Trustee Borrowings then outstanding.
(ii) Second, to payment of the Alliance Statutory Trustee Fee;
(iii) Third, to payment of any portion of the Trustee’s Professional Fees in excess of the Trustee’s Professionals Retainer, specifically approved and authorized by JPMorgan in writing following consultation among and between the Trustee and JPMorgan, and pertaining to services and expenses actually performed and incurred in the Alliance Litigation, and
(iv) Fourth, to JPMorgan to be applied to the amounts outstanding under the Final DIP Order, the DIP Credit Agreement and this Stipulation until JPMorgan has been paid in full;
(v) Fifth, to the Bankruptcy Estate. Any remaining portion of unpaid Trustee’s Professional Fees in excess of the Trustee’s Professional Retainer and not specifically approved and authorized by JPMorgan shall be paid from this portion of the Alliance Proceeds.

Consignment Litigation Payment Waterfall

The fight over consigned goods has been going on almost as long as the entire chapter 11/chapter 7 case. At the heart of that is the want by Diamond to sell of goods it has in its possession that were provided by publishers. Of course, publishers want their goods back, stating the contracts are no longer valid. All of that is before the court and court of appeals. The amount of goods isn’t quite clear as not all publishers are involved in disputes but we’re talking $10s of millions potentially for Diamond if they sold the inventory (I believe the inventory was over $100 million). But, the longer this dispute continues, the less that the inventory is possibly worth.

The estates also hold significant claims arising from consignment-related disputes. The Consignment Litigation implicates important rights in inventory, proceeds, and other assets that may yield value for the estates. The Trustee has and will continue to pursue the Consignment Litigation.

Below is how that money would be split out if Diamond prevails in court.

3.2 Consignment Litigation Payment Waterfall. If the Consignment Litigation is concluded and/or Settled in whole or in part, then, the distribution of any Consignment Proceeds shall be made as soon as practicable, and allocated as follows:
(i) First, to repayment of all Trustee Borrowings then outstanding.
(ii) Second, to payment of the Consignment Statutory Trustee Fee;
(iii) Third, to payment of any portion of the Trustee’s Professional Fees in excess of the Trustee’s Professionals Retainer, specifically approved and authorized by JPMorgan in writing following consultation among and between the Trustee, JPMorgan and Shapiro Sher, and pertaining to services and expenses actually performed and incurred in the Consignment Litigation, and;
(iv) Fourth,
(a) Seventy-five percent (75%) of the remaining Consignment Proceeds to JPMorgan (to be applied to the amounts outstanding under the Final DIP Order, the DIP Credit Agreement and this Stipulation until JPMorgan has been paid in
full;
(b) Twenty-five percent (25%) of the remaining Consignment Proceeds to the Bankruptcy Estate. Any remaining portion of unpaid Trustee’s Professional Fees in excess of the Trustee’s Professional Retainer and not specifically approved and authorized by JPMorgan shall be paid from this portion of the Consignment Proceeds.

Avoidance Litigation Payment Waterfall

This one is fascinating. Avoidance Litigation Payment is basically going over money previously paid out to make sure it passes the smell test.

The Debtors’ SOFAs indicate 90-day transfers in the aggregate amount of approximately $67 million, and approximately $12 million in 1-year insider transfers. While the Trustee must perform a proper preference analysis to make final determinations as to Avoidance Actions that are worth pursuing (it does not appear that any pre-conversion estate professional performed any comprehensive preference analysis), the Trustee anticipates the possibility of significant preference recoveries

Sounds like something might not have been kosher this past year? Due diligence is great but “anticipates the possibility of significant preference recoveries” sounds like something is up. There might be even more drama coming down the pipeline!

And here’s that payment plan if this is successful.

3.3 Avoidance Litigation Payment Waterfall. If any Avoidance Litigation is concluded and/or Settled in whole or in part, then, the distribution of any Avoidance Proceeds shall be made as soon as practicable, and allocated as follows:
(i) First, to repayment of all Trustee Borrowings then outstanding.
(ii) Second, to payment of the Avoidance Statutory Trustee Fee;
(iii) Third, to payment of any portion of the Trustee’s Professional Fees in excess of the Trustee’s Professionals Retainer, specifically approved and authorized by JPMorgan in writing following consultation among and between the Trustee, JPMorgan and Shapiro Sher, and pertaining to services and expenses actually performed and incurred in the Avoidance Litigation, and;
(iv) Fourth,
(a) Seventy-five percent (75%) of the remaining Avoidance Proceeds to JPMorgan (to be applied to the amounts outstanding under the Final DIP Order, the DIP Credit Agreement and this Stipulation until JPMorgan has been paid in full;
(b) Twenty-five percent (25%) of the remaining Avoidance Proceeds to the Bankruptcy Estate. Any remaining portion of unpaid Trustee’s Professional Fees in excess of the Trustee’s Professional Retainer and not specifically approved and authorized by JPMorgan shall be paid from this portion of the Avoidance Proceeds.

That’s Fisher’s plan laid out, a three pronged approach to get as much money as possible to pay back creditors… how much to the actual publishers is a whole other thing.

None of this is guaranteed and interested parties have time to object to any of this as well as the recent proposals to add additional staff.

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Diamond Trustee Morgan W. Fisher proposes adding Kramon & Graham, P.A. and SC&H Group, Inc., and Shapiro Sher Guinot & Sandler to the Chapter 7 Process

Posted on April 10, 2026 by Brett

There were a flurry of filings yesterday in Diamond‘s chapter 7 process with three having to do with new additions to, what feels like, the expanding team managing it all. Trustee Morgan W. Fisher submitted applications to hire:

Shapiro Sher Guinot & Sandler as Lead General Bankruptcy Counsel
Kramon & Graham, P.A. as Special Litigation Counsel
SC&H Group, Inc. as Financial Advisor and Litigation Support Consultant

Shapiro Sher Guinot & Sandler would join the Law Offices of Zvi Guttman, P.A. who had previously been approved to join the case and will replace Stearns Weaver Miller whose employment application is being withdrawn.

Shapiro Sher Guinot & Sandler would take over as lead general counsel with Guttman’s role declining though will still assist in the case in a limited capacity. There is a mention how there will be no duplication of services and both will “exercise billing judgment so that the estates are not double charged.”

According to the filing, Shapiro Sher Guinot & Sandler has extensive experience in “all aspects of bankruptcy cases, bankruptcy and commercial litigation, and corporate and commercial law.” They were contacted on March 1, 2026 and already began “extensive negotiations” with JPMorgan Chase Bank starting March 3.

Rates are:

Partners: $400.00 to $800.00 per hour
Associates: $350.00 to $405.00 per hour
Paralegals: $260.00 to $300.00 per hour

Kramon & Graham, P.A. is being proposed as the “Special Litigation Counsel” and focused on the litigation regarding Alliance Entertainment.

The Trustee believes that the Debtors have viable defenses to the Alliance claims and that the estates have viable, significant claims against Alliance. The Trustee believes that the potential recovery for the Debtors’ bankruptcy estates in the Alliance Litigation could be significant.

Kramon & Graham, P.A. will be paid a flat fee of $700,000 and then 25% of the gross recovery exceeding $2.8 million up and above the $700,000.

Finally, SC&H Group, Inc is looking to be brought on as “Financial Advisor and Litigation Support Consultant.” They will focus on the fiduciary duties under the Bankruptcy Code.

Robert L. Patrick, a Managing Director of SC&H, who will have primary responsibility for the services provided to the Trustee has extensive experience in bankruptcy financial advisory and litigation support planning and strategies (including, without limitation, avoidance action analysis, valuation work, insolvency analysis and general damages analysis) for individuals and entities both inside and outside of bankruptcy.

Their proposed hourly rates are:

Managing Director/Principal $525 – $700
Senior Manager/Manager $375 – $500
Senior/Staff $300 – $350

None of these additions are guaranteed, along with new financing proposed yesterday as well, interested parties can object and it all needs court approval. You can read all of the submitted motions below.

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Diamond Trustee Morgan W. Fisher asks Court to approve Debtor Financing

Posted on April 9, 2026 by Brett

There were a flurry of filings today concerning Diamond‘s chapter 7 process and we’ll get to them all, but the most interesting (so far) is a motion to approve financing from JPMorgan Chase Bank.

JPMorgan Chase Bank was the bank that had originally done “debtor in possession” financing during Diamond’s chapter 11, in short providing a loan that allowed them to operate through the process. Most of that is paid off, we’ll get to that below, but there’s a need to pay for the current chapter 7.

Fisher is asking the court to enter a new DIP credit agreement. There’s some interesting nuggets from the motion. Here’s some highlights:

WHEREAS, all obligations of the Debtors under the DIP Loan Documents became automatically due and payable in full on the Maturity Date of December 29, 2025. The Debtors’ failure to pay such obligations in full resulted in Events of Defaults under the DIP Loan Documents.

WHEREAS, on March 10, 2026, the DIP Lender filed its proof of claim No. 27 asserting its rights, claims, liens and interests under the DIP Loan Documents and the Final DIP Order (the “JPMorgan Proof of Claim”). In the JPMorgan Proof of Claim, the DIP Lender asserts the current outstanding amount owing from the Debtors to the DIP Lender under the DIP Loan Documents is not less than $6,579,473.92 in the aggregate, with interest, costs and attorneys’ fees continuing to accrue, pursuant to the terms and conditions of the Final DIP Order and the DIP Loan Documents.

Technical Amendments of Final DIP Order and DIP Credit Agreement and Reinstatement of DIP Credit Agreement. The DIP Credit Agreement is reinstated, effective upon the Bankruptcy Court’s approval of this Stipulation. The Maturity Date under the DIP Credit Agreement is extended through and including June 30, 2027. The Maximum DIP Facility Amount is increased to and including $8,200,000. All references in the Final DIP Order, the DIP Credit Agreement and the DIP Loan Documents to the Debtors/Borrowers shall be deemed amended to include the Trustee as the authorized Borrower under the DIP Credit Agreement. Following return of the Letter of Credit (as defined in the Final DIP Order), the DIP Lender is authorized to draw and apply the funds securing the Letter of Credit to the outstanding indebtedness under the DIP Credit Agreement without further order of the Court.

But most interesting is laying out the various litigation going on and how any proceeds will be paid out:

3.1 Alliance Litigation Payment Waterfall. If the Alliance Litigation is concluded and/or Settled in whole or in part, then, the distribution of any Alliance Proceeds remaining after payment of any unpaid portion of the K&G Flat Fee, any amount due to K&G for the K&G Contingency Fee, and any unreimbursed and authorized K&G Expenses shall be made as soon as practicable, and allocated as follows:
(i) First, to repayment of all Trustee Borrowings then outstanding.
(ii) Second, to payment of the Alliance Statutory Trustee Fee;
(iii) Third, to payment of any portion of the Trustee’s Professional Fees in excess of the Trustee’s Professionals Retainer, specifically approved and authorized by JPMorgan in writing following consultation among and between the Trustee and JPMorgan, and pertaining to services and expenses actually performed and incurred in the Alliance Litigation, and
(iv) Fourth, to JPMorgan to be applied to the amounts outstanding under the Final DIP Order, the DIP Credit Agreement and this Stipulation until JPMorgan has been paid in full;
(v) Fifth, to the Bankruptcy Estate. Any remaining portion of unpaid Trustee’s
Professional Fees in excess of the Trustee’s Professional Retainer and not specifically approved and authorized by JPMorgan shall be paid from this portion of the Alliance Proceeds.

3.2 Consignment Litigation Payment Waterfall. If the Consignment Litigation is concluded and/or Settled in whole or in part, then, the distribution of any Consignment Proceeds shall be made as soon as practicable, and allocated as follows:
(i) First, to repayment of all Trustee Borrowings then outstanding.
(ii) Second, to payment of the Consignment Statutory Trustee Fee;
(iii) Third, to payment of any portion of the Trustee’s Professional Fees in excess of the Trustee’s Professionals Retainer, specifically approved and authorized by JPMorgan in writing following consultation among and between the Trustee, JPMorgan and Shapiro Sher, and pertaining to services and expenses actually performed and incurred in the Consignment Litigation, and;
(iv) Fourth,
(a) Seventy-five percent (75%) of the remaining Consignment Proceeds to JPMorgan (to be applied to the amounts outstanding under the Final DIP Order, the DIP Credit Agreement and this Stipulation until JPMorgan has been paid in
full;
(b) Twenty-five percent (25%) of the remaining Consignment Proceeds to the Bankruptcy Estate. Any remaining portion of unpaid Trustee’s Professional Fees in excess of the Trustee’s Professional Retainer and not specifically approved and authorized by JPMorgan shall be paid from this portion of the Consignment Proceeds.

3.3 Avoidance Litigation Payment Waterfall. If any Avoidance Litigation is concluded and/or Settled in whole or in part, then, the distribution of any Avoidance Proceeds shall be made as soon as practicable, and allocated as follows:
(i) First, to repayment of all Trustee Borrowings then outstanding.
(ii) Second, to payment of the Avoidance Statutory Trustee Fee;
(iii) Third, to payment of any portion of the Trustee’s Professional Fees in excess of the Trustee’s Professionals Retainer, specifically approved and authorized by JPMorgan in writing following consultation among and between the Trustee, JPMorgan and Shapiro Sher, and pertaining to services and expenses actually performed and incurred in the Avoidance Litigation, and;
(iv) Fourth,
(a) Seventy-five percent (75%) of the remaining Avoidance Proceeds to JPMorgan (to be applied to the amounts outstanding under the Final DIP Order, the DIP Credit Agreement and this Stipulation until JPMorgan has been paid in full;
(b) Twenty-five percent (25%) of the remaining Avoidance Proceeds to the Bankruptcy Estate. Any remaining portion of unpaid Trustee’s Professional Fees in excess of the Trustee’s Professional Retainer and not specifically approved and authorized by JPMorgan shall be paid from this portion of the Avoidance Proceeds.

Also of note is the mention of hiring Kramon & Graham, P.A focusing on litigation involving Alliance Entertainment, guaranteeing them a minimum of $700,000 from the bankruptcy estate as well as a contingency fee of 25% of any gross recovery exceeding $2.8 million minus the guaranteed $700,000. We’ll have more on them and all of the other motions to bring on new teams to the process in another post.

That’s a lot of money going to the individuals managing the process as well as the banks loaning money, potentially not leaving a whole lot for the publishers owed, and amount that still seems to be up in the air. But, none of this is guaranteed and we’ll see if any objections are filed to this and other motions filed today.

Stay tuned, we’ll have a lot more analysis tomorrow from this filing and more.

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California’s attempt to get Taxes from Diamond is Denied Due to Deficiency

Posted on April 3, 2026 by Brett

In March, California entered the chat looking to get the taxes it is due from Diamond Comic Distributors.

From April 1 to May 16, Diamond owes $259,724.53.

The filing did have an issue, and while notified, California did not correct that deficiency causing the motion to be stricken by the court.

Notice having been given of a deficient filing [1190] Application for Administrative Expenses filed by a party in interest in the instant case, and said deficiency not having been corrected within the time prescribed in the notice; it is
hereby
ORDERED, that the above−referenced filing is stricken from the official record of the instant case.

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Diamond Chapter 11

The Consignment Group files their Support for the Ad Hoc Committee’s Motion to release Consigned Stock in Diamond’s Chapter 7 Case

Posted on March 31, 2026 by Brett

The Consignment Group, which consists of Aspen, Black Mask, DSTLRY, Dynamic Force/Dynamite, Heavy Metal, Magnetic Press, Massive Publishing, Oni-Lion Forge, Panini, Alien Books, Graphic Mundi, Titan, Vault Comics, and Dark Horse, have submitted a response/joinder to the court in support of the Ad Hoc Committee‘s motion for the court to release consigned stock currently held by Diamond.

One of the biggest fights during Diamond’s chapter 11/chapter 7 process has concerned consigned goods provided by publishers and currently held by Diamond and stored by Sparkle Pop. In short, Diamond believes they “own” the product and can sell the goods to help pay off its debts. Of course, the publishers wants their goods back.

In their response/joinder, the Consignment Group argues:

The publishers have a distribution agreement with Diamond for the goods on a consignment basis, but the publishers own the inventory,
If the distribution agreement is terminated, the goods need to be returns,
Diamond currently has a lack of “adequate storage,” has let insurance lapse, and the goods are still being sold unauthorized,
The stock is losing value and publishers aren’t able to distribute the product through other ways which is causing issues with consumers as well as contractual claims,
The distribution agreement has been terminated/rejected and because of that, the goods should be immediately returned,
Some consigned goods were provided after Diamond’s chapter 11 process began, so the trustee doesn’t have claim to that.

They’re asking the judge to grant the Ad Hoc Committee’s relief and release the consigned inventory, as well as any other relief the Court deems just and proper.

You can read the full filing below.

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Diamond Chapter 11

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