Things have been rather quiet when it comes to Diamond’s chapter 7 drama but today there’s been a big decision as a settlement has been approved with some publishers. In September, a compromise was been reached between Diamond and its Trustee Morgan W. Fisher, Sparkle Pop, and 13 publishers. The settlement involves the “Palik Consignment Group” which includes Aspen, Black Mask Studios, DSTLRY, Heavy Metal International, Magnetic Press, Massive Publishing, Oni-Lion Forge Publishing, Panini UK, Alien Books, Graphic Mundi, Titan Publishing Group, Vault Comics, and Dark Horse Comics.

The publishers, Diamond, and Sparkle Pop have been a fight regarding consigned goods. The publishers feel the goods are theirs, Diamond claims it has a right to them and wants to sell it to pay back debts, and it’s currently stored by Sparkle Pop (which purchased some of Diamond’s assets). Sparkle Pop has also been caught selling the consigned goods.

In August, Diamond and its Trustee reached a settlement with a different group of publishers, a total of 15. That settlement didn’t include Sparkle Pop and is currently being litigated.

The two deals are very different. While the initial deal involved an audit and publishers paying for the packing and shipping, this deal is a similar concept but structured very differently.

It ends fights over relief between these publishers, Diamond, and Sparkle Pop, effectively closing the long-running battle over consigned goods for these publishers.

The deal includes:

• The Palik Consignment Group are granted Chapter 11 administrative expenses;
• Money in Court Registry Escrow will be released to the Trustee;
• When the settlement agreement with the Ad Hoc Consignment Group (the other publishers) is approved, the Trustee will disburse $308,890 to Sparkle Pop with remaining funds going to the Trustee;
• The SP Escrow will be released to Sparkle Pop. That amount is $105,856;
• The Distribution Agreements of the Palik Consignment Group are officially rejected;
• Adversary Proceedings will be dismissed;
• The Trustee will file a notice that the Consigned Inventory is abandoned and belongs to the Palik Consignment Group;
• Sparkle Pop will get inventory of the default judgements including Digital Manga, Net Comics, Valiant, and the inventory covered in the Image Comics settlement.

Sparkle Pop will get $787,380 total. They are also part of Tariff Refund Rights Sharing and that as well as the escrow amount will satisfy Sparkle Pop’s claims against the Trustee, Diamond, and the Palik Consignment Group. Sparkle Pop has been fighting to get paid for warehouse storage as well as costs associated with selling consigned goods.

Tariff Refunds were mentioned, I believe for the first time, in this filing. They’ll be split 50/50 between Sparkle Pop and the Trustee minus whatever costs to get the refund.

The mechanism for publishers to get their product back is interesting. There are two options listed:

• Pik&Pak Option 1: Sparkle Pop picks 4% of the value of remaining wholesale Consigned Inventory in lieu of payment; the remaining 96% is picked, packed, palletized, and made available without additional charge;
• Pik&Pak Option 2: Each member pays 2% of wholesale value directly to Sparkle Pop; all remaining inventory is picked, packed, palletized, and made available. Risk of loss transfers upon loading at dock or tender to carrier.

Each Palik Consignment Group Member has thirty days after notice to remove its inventory from the Warehouse with failure to timely remove it being deemed abandonment. Members can also request that Sparkle Pop destroys the inventory at no additional cost.

This is a major step into wrapping up Diamond’s chapter 7 drama which began in January 2025. While there’s still a long way to go this is one key element that is now settled.

You can read all of the filings below including the approval as well as the original motion.