The Diamond Chapter 11/Chapter 7 process has been one filled with drama and it feels like you never know where it might go next. In late February, tabletop game publisher Goodman Games raised a question if there was an arrangements between the Trustee and secured creditors (most likely JPMorgan Chase Bank).

The Trustee, Morgan W. Fisher, manages the Chapter 7 process going through remaining assets, liquidating, and attempting to get the most value to pay back creditors.

In their filing Goodman Games wrote:

Goodman Games understands that there may be an arrangement between the Trustee and one or more secured creditors concerning the payment of the Trustee’s fees and expenses, whether in the form of a carve-out from collateral, a sharing of recoveries, or another similar agreement.

To the extent such arrangement exists, Goodman Games respectfully submits that it should be fully disclosed so that the Court and all creditors are aware of the nature and terms of the agreement.

Goodman Games has requested this information from the Applicant. As of the filing of this Response, the Application does not describe any such arrangement.

Goodman Games therefore respectfully requests that, to the extent any such agreement or understanding exists concerning the funding or payment of the Trustee’s professionals’ fees, the Trustee and/or Applicant provide appropriate disclosure so that the Court and parties in interest are fully informed in connection with consideration of the Application.

The bankruptcy court took the request seriously enough asking for a memorandum addressing the matter of “undisclosed arrangements with creditors for the payment of the Trustees fees and expenses.”

That memorandum has now been submitted by Fisher and states:

There are no (and were no) undisclosed arrangements with any creditors. This fact was made clear to counsel for Goodman Games prior to her filing of the Response. Attached as Exhibit A is a copy of that colloquy. In no uncertain terms, proposed counsel for the Trustee stated that “The agreement to share recoveries was approved during the chapter 11 case…” and that no agreement or use of cash collateral was “needed for payment of professional fees of our firm.” Ex.

The memorandum goes on to state that what is likely being referred to and questioned is the “Shared DIP Collateral” in the Final DIP Order. The DIP is “debtor in possession” and involves loan agreements and paying things back.

The memorandum further states:

That agreement between the chapter 11 debtors-in-possession and the DIP Lender granted the DIP Lender a first-priority, blanket lien on all assets of the Debtors, including all property of the estate and “expressly including… all … Avoidance Actions, commercial tort claims, other estate causes of action …” [Docket No. 163 at ¶ 13(b)]; provided, however, that the Lenders agreed to “share with the Debtors’ estates 50% of the net proceeds recovered from the Shared DIP Collateral until the DIP Obligations have been paid in full …” Id. “Shared DIP Collateral” is, in turn, defined in the Final DIP Order as just “the Avoidance Actions and commercial tort claims,” Id. at ¶ 11(a), and not other estate causes of action.

This, and only this, is the agreement for shared recoveries Mr. Dillworth was alluding to in his email and why he implored counsel for Goodman Games to “[r]e-read what I stated below with respect to our fees,” i.e., that no agreement or use of cash collateral was “needed for payment of professional fees of our firm.” Ex. A. Simply put, there was no undisclosed arrangement with creditors for the payment of the Trustees fees and expenses. If such an agreement had been reached with the DIP Lender (or any other party in interest) on that front, then it would have been brought to the Court for approval in compliance with the Bankruptcy Code and Bankruptcy Rules.

Where things get intriguing is Goodman Games raised the concern during what seemed like a simple filing for the Trustee to employ Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A. as bankruptcy counsel to the Trustee. That decision was delayed by the court while the concern of dealings was addressed. On March 15, Fisher submitted a new motion to defer the ruling to employ that counsel.

Since the filing of the Stearns Weaver Application, circumstances have arisen that have caused Stearns Weaver to seek to withdraw as proposed bankruptcy counsel to the Trustee.

They are being engaged in finding a replacement. It is unknown what the “circumstances” are that caused the withdrawal.

You can read the memorandum and exhibit A, and other filings below:

Diamond’s Chapter 7 Trustee Morgan W. Fisher‘s application to employ Stearns, Weaver, Miller, Weissler, Alhadeff, & Sitterson, P.A. as bankruptcy counsel (don’t they already have some?) should have been rather simple. But, things feel like they’re getting testy in a response to that proposed order by Goodman Games.

Goodman Games is a tabletop game publisher best known for Dungeon Crawl Classics and was founded in 2001.

In their filing on February 26, Goodman Games states it has no problem with the Trustee retaining “qualified bankruptcy counsel per se” but it’s what comes next that’s intriguing:

Goodman Games understands that there may be an arrangement between the Trustee and one or more secured creditors concerning the payment of the Trustee’s fees and expenses, whether in the form of a carve-out from collateral, a sharing of recoveries, or another similar agreement.

To the extent such arrangement exists, Goodman Games respectfully submits that it should be fully disclosed so that the Court and all creditors are aware of the nature and terms of the agreement.

Goodman Games has requested this information from the Applicant. As of the filing of this Response, the Application does not describe any such arrangement.

Goodman Games therefore respectfully requests that, to the extent any such agreement or understanding exists concerning the funding or payment of the Trustee’s professionals’ fees, the Trustee and/or Applicant provide appropriate disclosure so that the Court and parties in interest are fully informed in connection with consideration of the Application.

Woah… that’s a pretty big response. It teases that there’s some backroom discussions and dealings going on with a process that’s supposed to be very transparent.

The bankruptcy court is taking it seriously. They’ve requested a memorandum addressing the matter of “undisclosed arrangements with creditors for the payment of the Trustees fees and expenses.”

No action will be taken on the Application (and the related pending motions for admission pro hac vice) unless and until the Trustee files a supplemental memorandum addressing the matter of undisclosed arrangements with creditors for the payment of the Trustees fees and expenses referred to in the Response filed by Goodman Games [Docket No. 1172]. If such a memorandum is not filed by March 15, 2026, the Application may be denied without further notice or order of court.

In a process that has been full of drama, a new chapter is being written. AS Kurt Vonnegut would say, “so it goes.”

Check out the two court documents below: