It’s a massive team-up of publishers who have filed a joint motion objecting to Diamond Comic Distributor‘s motion that would allow them to sell, liquidate, dispose of, inventory it currently still has. Many publishers have been vocal about the motion and many have responded to our inquiries with “no comment” because it’s an ongoing legal matter. So far, TwoMorrows Publishing, Magma Comix, and Graphitti Designs, Abstract Studio, NBM, William M. Gaines, Agent, Inc., and Humanoids have each filed objections to the motion.
Aspen Comics, Black Mask Studios, DSTLRY Media, Dynamic Forces, aka Dynamite Entertainment, Heavy Metal International, Magnetic Press, Massive Publishing, Oni-Lion Forge Publishing Group aka Oni Press, Panini UK Ltd., Punk Bot Comic Books, aka Alien Books, The Penn State University aka Graphic Mundi, Titan Publishing Group, and Vault Storyworks, aka Vault Comics formerly known as Creative Mind Energy have formed like Voltron to form a new team called the “consignment group” entering the legal fight.
The 63 page document starts with what we’d expect stating the publishers own the merchandise, aka consigned goods, and not the property of Diamond Comic Distributors. It then dives into Diamond’s claim that the publishers needed to file a UCC-1 financing statement which would have protected them against this situation. The legal argument says that may not needed as this was a “true consignment” established by the various contracts signed and state law.
This filing is similar to Humanoids’ stating that contested matter needs to be handled by Rule 7001(2) of the Federal Rules of Bankruptcy Procedure and requires an adversary proceeding and emphasizes again that the publishers own the goods, not Diamond. It also states that it was Diamond’s intention to sell the goods this way and that they should have paid the publishers as per the terms of their agreements.
Like Humanoids’ objection, there’s a focus on Bankruptcy Rule 7001(2) requires that says an adversary proceeding has to happen to determine the “validity, priority, or extent of [an] interest in property.” In short, it hasn’t been determined that the consignment product is property of Diamond and that needs to happen before they can sell anything.
Part of Diamond’s initial motion is that no publishers filed a UCC-1 financing statement which would have protected them. But, did they even need to file it? The publisher’s motion calls them “true consignments,” and don’t meet the definition of UCC Section 9.
(A) the merchant:
(i) deals in goods of that kind under a name other than the name of the
person making the delivery;
(ii) is not an auctioneer; and
(iii) is not generally known by its creditors to be substantially engaged
in selling the goods of others.
(B) with respect to each delivery, the aggregate value of the goods is $1,000 or
more at the time of delivery;
(C) the goods are not consumer goods immediately before delivery; and
(D) the transaction does not create a security interest that secures an obligation.
Back to that non-payment. Goods were shipped after Diamond’s January 14 Chapter 11 filing, and the publishers should be paid for them and administrative expense claims such as attorney fees and late penalties.
The rest of the filing includes purchase order agreements, distribution agreements, details of those agreements like discount percentages, and more.
