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Sparkle Pop Steps into the Consigned Goods Craziness of Diamond’s Bankruptcy Asking for Relief

Sparkle Pop has filed a motion “for relief from the automatic stay to exercise its rights under applicable state law with respect to the goods remaining in a distribution facility owned and operated by Sparkle Pop.” One of the ongoing fights in Diamond‘s bankruptcy concerns consigned goods provided by publishers and still “held” by Diamond. Publishers of course want their inventory back while Diamond claims it has a right to it so it can sell the product and pay back creditors. The inventory is currently being stored in a facility run by Sparkle Pop, one of the winners of the bidding for Diamond’s assets during the bankruptcy.

In the filing, Sparkle Pop states there are “8,250,936 units of these goods being stored at the Mississippi Facility.”

Sparkle Pop also states it is owed $641,430 as of April 2026 and has not received its rent payments from (old) Diamond since November 2025. Rent is $125,000 a month. Sparkle Pop previously filed an administrative claim for $580,000 in March.

Sparkle Pop also takes a bit of a jab at Diamond, and its Trustee Morgan W. Fisher, claiming insurance on the goods being stored is not being maintained. While the facility is insured, the goods are not. This is part of the argument by publishers that the previous agreement between them and (old) Diamond is now void and in some way support their argument and claim. The agreement between (old) Diamond and publishers states insurance will be maintained. The publisher’s argument is that when that insurance lapsed it was a violation of their agreement and thus negates their contract triggering a process laid out in the contract where they would get back the consigned goods.

Sparkle Pop goes on to state that the goods are taking up so much space, it denies Sparkle Pop’s use of the facility for its own goods and ability to conduct and operate its own business.

Sparkle Pop is, in effect, being denied the value of the assets that it purchased through the Asset Purchase Agreement.

The distributor is renting additional storage space at its “sole (and significant)” cost to store its own goods which also means additional insurance for the new location. Even if (old) Diamond’s consigned inventory is moved, it’ll be further cost to Sparkle Pop to move their inventory to the facility and space currently being taken up by (old) Diamond. There’s also the increase expenses of just managing and having to work around (old) Diamond’s inventory.

In short, Sparkle Pop is now arguing it is suffering damages from (old) Diamond’s consigned goods being stored in their facility.

Sparkle Pop is looking to be for all of its fees and costs related to the consigned goods or it could exercise its “rights and remedies under Mississippi law to, among other things, assert a warehouseman’s lien on the consigned goods and/or take the necessary steps, under applicable law (or with the consent of the parties), to arrange for these goods to be removed from the Mississippi Facility.”

A “warehouseman’s lien” allows the warehouse to retain possession of the goods on its premises until the outstanding charges or depts are paid by the owner of the goods. It’s a security to make sure the debts are paid. If the debts are unpaid, they could then sell the goods to recover the unpaid amounts.

What’s not mentioned is the accusation that Sparkle Pop is still selling the consigned goods in violation of a court order. The Ad Hoc Committee of Consigners in a filing has evidence and accused the distributor of continuing to do so.

The extensive filing, which you can see below, includes a listing of the consigned stocked currently being held. At 125 pages, it’s a lot to go through, but you can see what comics, publishers, and creators are impacted by this mess. It’s not everything, there’s publishers missing that are currently fighting in court, but it highlights 14 publishers.

Sparkle Pop Responds to Latest Consignment Stock Fight Updates in Diamond’s Chapter 11/Chapter 7

In February, the motion to extend time to “assume or reject executory contracts related to consigned goods” was denied by the court in regards to Diamond‘s chapter 11/chapter 7 process. This concerned the ongoing question regarding contracts between (old) Diamond and publishers handling consigned goods. Who “owns” those goods is a contentious issue with publishers wanting their product back while Diamond, and now their Trustee, want to be able to sell the consigned goods to pay back creditors.

The denial of the motion by the Trustee has caused a chain of rejections. Because the contracts were not assumed or rejected by the deadline, publishers have pounced citing law that saws the contracts default to rejected. You can read about that here and here. Because the contracts are rejected, there’s laid out steps in the contracts as to what happens to consigned goods, primarily the publishers can get them back for the cost of shipping.

Sparkle Pop has filed a response to the motions. Sparkle Pop is one of the companies that purchased some of the assets from Diamond in their chapter 11 and has been managing the storage of the consigned goods.

Adding more to it, Sparkle Pop was caught selling consigned goods they had no right to, were told by the court to stop, and ordered to deposit the money gained in an account controlled by the court. In recent filings, Sparkle Pop has been accused of breaking that order to not sell consigned goods raising questions of Diamond and Sparkle Pop’s ability to protect and care for the consigned goods while the process plays out.

Sparkle Pop’s motion raises the ongoing dispute claiming it’s between (old) Diamond and the publishers resulting in adversary proceedings between (old) Diamond and multiple publishers. While there’s been orders setting out what’s next in these proceedings, the discovery process (handing over documents to lawyers) hasn’t commenced.

Sparkle Pop is sort of staying neutral in it all, not taking sides as to who owns the consigned goods, but instead states that the adversary proceedings should be allowed to play out and that recent motions by publishers for a decision on consigned goods shouldn’t be approved. (Old) Diamond and its now trustee had a deadline to approve or reject agreements and that deadline passed, so publishers filed for a decision based on that saying it was defacto rejection of existing agreements and thus they should get the goods. The trustee has filed an appeal over the decision to reject the timeline extension.

Sparkle Pop does not contend that it has any ownership interest in the consigned goods other than as set forth herein. Sparkle Pop further does not take any position as to whether the Trustee or the Consignors has a superior interest in the consigned goods.

Sparkle Pop’s concerns are more focused on the impact of the goods on them.

(a) rent/storage fees are in arrears and there is no guarantee that future rent payments will be made;
(b) no payments have been remitted to Sparkle Pop for its processing fees for goods that have been sold; and
(c) it will be an extremely expensive and time consuming process for Sparkle Pop to organize, pack and move the consigned goods to the loading docks for whomever (whether it be the Trustee or the Consignors) ultimately is determined to be the owner of the consigned goods.

They go on to state they haven’t been paid for rent/storage by (old) Diamond for the goods since November 2025 and that rent owed exceeds $500,000 with $125,000 a month incurred. They’re also claiming they are owed 30% processing fees for any sales that have been processed.

They also state returning the consigned goods would be difficult:

Finally, it will be a very cumbersome and expensive process for Sparkle Pop to make the consigned goods available for retrieval whether that be by the Trustee or the Consignors. This difficulty exists because, among other things, (a) the consigned goods are not organized by consignor; and (b) the consigned goods are not packaged or otherwise ready to be retrieved. The market rate for these types of goods to be “Picked and Packed” and moved to the loading docks for retrieval will ultimately depend on how the owners of these consigned goods want the goods to be staged.

They wrap up claiming:

Sparkle Pop contends that it may have a warehouseman’s lien under Mississippi law with respect to these consigned goods and is exploring its legal options in Mississippi under Mississippi law.

There is no comments disputing the claims of goods being sold after the judge ordered them not to.

You can read the full response below:

Diamond vs. Publishers Heads into 2027

We brought the news in early March that there was some movement in the court case between Diamond and numerous publishers. The various parties and Diamond met on February 26 and March 3-4 in an attempt to find a resolution, the nature of the claims and defenses, to arrange disclosures, and propose a discovery plan. On March 4, there was a filing hashing out the plan for discovery, the process where documents pertaining to the case are handed over.

The issue is who owns the consigned goods that are still being held by Diamond. Ablaze, Battle Quest Comics, American Mythology Productions, Action Lab Entertainment, BOOM! Entertainment, and Fantagraphics are all fighting to get their inventory back. Diamond wants to keep the inventory to be able to sell it off to pay creditors. JPMorgan Chase Bank wants Diamond to sell off the inventory so it can get paid back by Diamond. Sparkle Pop is involved because it has sold off some of the inventory when it wasn’t supposed to and currently is holding the physical product in a warehouse it controls.

We said in our recent reporting that the earliest the trial would happen is November but likely December due to holidays. Well, we were off, because there is now a “hearing on dispositive motions” is set for January 27, 2027. That’s a hearing that asks the court for a ruling before a trial begins. The trial is expected to last 3 to 4 days.

How recent moves to have Diamond’s claims over the consigned inventory dismissed by other publishers, as well as the Trustee’s proposed deal with Sparkle Pop to sell the consigned goods impacts this is unknown… but get settled, because this could go for quite a while.

Fellow is an example of one of the orders released today.

The Ad Hoc Committee of Consigners Renews their Request to the Court to Release their Stock. Sparkle Pop Accused of Still Selling Stock in Violation of Court Order.

One of the major outstanding issues with Diamond‘s bankruptcy is the status of consignment inventory. Diamond currently has stock that was provided to it by publishers on a consignment basis. That stock is currently physically held by Sparkle Pop which purchased some of Diamond’s assets, including taking over the warehouse where these are stored, though they don’t have a right to sell it (which they did and there was drama around that). We reported that a group of publishers filed a motion to dismiss their cases and thus take control of their goods. But, there’s still a few more publishers that are outstanding and since that motion hasn’t been decided, things are still in motion.

Now, the Ad Hoc Committee of Consigners have filed a motion renewing their request for the release of the stock. Like the Consignment Group, a different group of publisher, the Ad Hoc Committee emphasizes that (old) Diamond has “rejected” their contracts that guided the relationship between Diamond and publishers while (old) Diamond was distributing.

That “rejection” of the contract triggers a bunch of next steps as to how to handle product that Diamond possesses but was provided by publishers.

The motion goes further into highlighting:

  • Sparkle Pop sold stock that was on consignment when it wasn’t supposed to. That stock sale has not been paid out to publishers, violating the contract.
  • Diamond by allowing the stock to be sold was a failure to safely secure the stock, another violation of the contract.

Those two points alone make the contract terminated.

Now that the contract is rejected/terminated/void, the “consignors,” aka the publishers, can remove their product at their own expense. In other words, the publishers can get their product back but will need to pay to do that, like shipping.

The motion raises other concerns that show Diamond is in breach of their agreements.

  • The motion states that Diamond’s insurance coverage has lapsed, a breach of their requirements.
  • Diamond has not paid their stock fees to Sparkle Pop, which bought some of Diamond’s assets and currently is holding the physical stock in a warehouse and since that breaches an agreement between Diamond a Sparkle Pop, Diamond is not officially storing the stock and has no means to store it.

But, in what might be the biggest bombshell of the filing, Sparkle Pop is being accused of continuing to fulfill orders containing consigned stock in violation of an order from the court.

From the filing:

One of the Consignor’s, Drawn & Quarterly Books, Inc. (“Drawn & Quarterly”) has a store in Canada. Drawn & Quarterly placed an order in 2025 with Diamond that included the Stock from another Consignor, Fantagraphics Books, Inc (“Fantagraphics”). Recently, on February 26, 2026, Drawn and Quarterly received an email, a true and accurate copy of which is attached hereto as Exhibit B informing them that their order for Fantagraphics’ product had just been shipped.

This is concerning as the Consignors have been given no access to, or oversight of, their Stock since the commencement of this bankruptcy case. The continued fulfillment of orders, without the Consignor’s ability to verify proper control, safeguarding, and accounting of their Stock is extremely prejudicial to their interests and the preservation of its value.

Another Consignor, Living the Line, reports that at least 800 copies of a single title are not accounted for in any prior inventory report provided by Sparkle Pop. Thus, it is imperative that the Consignors regain possession and control of their goods because no party is accountable for missing items that are causing ongoing losses to the Consignors.

The image shows Drawn & Quarterly ordering One More Year for their shop. That graphic novel was published by Fantagraphics in 2027.

The above image shows Drawn & Quarterly ordering One More Year for their shop. That graphic novel was published by Fantagraphics in 2017.

But that opens up the question… what is up with the stock!? The consignors are getting no details regarding it, and haven’t for over a year. That impacts tax obligations and without an accurate account of the inventory, there’s no way to manage their financial obligations. Consignors “do not have an accurate inventory of and continues to depreciate in value.”

The Ad Hoc Committee has asked the court to grant the motion, order the distribution agreements officially terminated, give the consignors 90 days from the effective date of the order to remove the stock, and grant any other relief.

You can read the official court documents below including the evidence concerning Sparkle Pop.

Fight Over Consigned Goods Continues with Objections and a Settlement with Sparkle Pop

One of the major issues that has yet to still be resolved regarding Diamond’s Chapter 7 process is the status of consigned goods being held by (old) Diamond and stored by Sparkle Pop.

At issue is that some inventory was provided by publishers to (old) Diamond when it was in business that was provided on consignment. When Diamond went into Chapter 11, they claimed the goods were theirs due to the lack of some paperwork filed by publishers and the goods were used to obtain a loan. The publishers of course say the goods are theirs and want it back. A fight has been ongoing with a lot of maneuvering in the court.

The Trustee who is overseeing the Chapter 7 case has asked for an extension of a deadline to figure out how to deal with it all.

The Ad Hoc Committee of Consignors as well as members of the Consignment Group have objected for a further deadline extension with a filing featuring some pretty harsh words.

The Ad Hoc Committee of Consignors claims that the delays is an intension to “use remaining estate assets on litigation and attorney’s fees rather than paying creditors.” Instead of using the time to “build consensus and explore settlement opportunities,” the Trustee has used the first sixty days to hire a litigation team in Florida.

Objections to Diamond’s claims have been submitted since at least May 15, 2025 and have dragged out since.

The filing by The Ad Hoc Committee of Consignors is an interesting read laying out their case an argument and you can get a sense of the frustration. The Consignment Group reveals some dirt as to how much is owed to some of the publishers while pointing out that Diamond’s November Operating Report shows $1,308,292.00 cash on hand.

ConsignorPetition Disclosable Economic Interest in Case
Aspen Mlt, Inc$1,890.50 (Scheduled Amount)
Black Mask Studios$2,000.15 (Scheduled Amount)
Creative Mind Energy$12,878.62 (Scheduled Amount)
Dark Horse Comics, Inc$86,927.11 (Proof of Claim No. 692)
DSTLRY Media$65,013.15 (Scheduled Amount)
Dynamic Forces, Inc$244,201.44 (Proof of Claim No. 680)
Graphic Mundi – PSU Press$15,523.33 (Scheduled Amount)
Heavy Metal Entertainment$363.37 (Scheduled Amount)
Magnetic Press LLC$51,067.53 (Proof of Claim No. 684)
Massive Publishing LLC$40,700.69 (Proof of Claim No. 703)
Oni-LF Publishing Group, LLC$179,942.40 (Proof of Claim No. 682)
Panini UK Ltd$4,993.05 (Scheduled Amount)
Punk Bot Comic Books, LLC$122,006.87 (Proof of Claim No. 509)
Titan Publishing Group Ltd$413,898.17 (Proof of Claim No. 49)
Total$1,241,450.29

In a more surprising turn of events, the Chapter 7 Trustee and Sparkle Pop have reached a settlement to:

finally resolve the above captioned bankruptcy estates’ interests in the Consigned Goods, the Distribution Agreements, and the Consignment Litigation (as those terms are defined in the Motion) a component of which is the potential sale and assignment of the estates’ interest therein.

The settlement involves:

  1. Sparkle Pop will pay the Trustee $1,000,000, 75% of the first $1,500,000 in Net Proceeds of the Consigned Inventory. Sparkle Pop gets 30% of the gross proceeds as an expense association with selling the Consigned Inventory.
  2. If the date this gets settled is before March 1, Sparkle Pop is allowed to get administrative expense claim against the Bankruptcy Estates in the amount of $435,000 and if the effective date is after March 1, that goes up to $585,000.
  3. The Trustee is selling and assigning all of the Bankruptcy Estates’ rights in the Consigned Inventory to Sparkle Pop.
  4. No more than 10 days after the date of approval, the following actions will be taken:
    • a. Withdraw, with prejudice, the Motion (I) to Enforce the Automatic Stay, (II) To Enforce the Sale Order, and (III) Granting Related Relief [D.I. 784]; and
    • b. Substitute as plaintiff, or proceed to dismiss, without prejudice, the Consignment Adversary Proceedings.
  5. Sparkle Pop will provide a list of Consignment Agreements designated for assumption and assignment along with Sparkle Pop’s proposed cure cost for each.

We’re sure the publishers will be responding to this proposal. You can read the documents below:

Update: JPMorgan and Sparkle Pop’s Time to Respond to Questions over their Interest in Diamond Inventory Extended

The Diamond chapter 11 process is now chapter 7 and with that, it creates a ripple across numerous related lawsuits. One such group of lawsuits involves JPMorgan‘s “Validity, Priority or Extent of a Lien or Other Interest in Property.” In question is inventory that Diamond has that is consignment goods provided by publishers. The goods are being held in a warehouse controlled by Sparkle Pop. It is before the court as to figure out who actually owns the inventory. Does Diamond, who can then sell it and pay back its creditors, like JPMorgan? Also, what claim does JPMorgan have as far as the inventory since the inventory was used as collateral by Diamond to get a loan?

The question concerns multiple lawsuits spanning multiple publishers with all of the various court documents similar. JPMorgan now has until February 16, 2026 to respond to this.

Update: Sparkle Pop‘s time to respond to the same complaint has also been extended to February 16. The order is below.

Original complaint example:

Diamond Chapter 11 Lawsuit Sidequests Get Delayed Due to Chapter 7

Diamond‘s chapter 11 case turned into chapter 7 at the end of 2025 and is now moving ahead with the appointment of individuals to manage the process. A question has been out there, how does that impact the numerous lawsuits that have spun out of the chapter 11. There’s lawsuits concerning inventory that (old) Diamond claims it has a right to but is being managed by (new) Diamond, aka Sparkle Pop, and of course (old) Diamond’s loan lender JPMorgan Chase Bank wants their money, so they have a claim too. It’s a lot to keep track of, dozens of separate cases at this point with most being rather quiet but every so often dust gets kicked up. Today was one of those days.

So far today, BOOM! Entertainment, Living the Line, Herman & Greer, Green Ronin Publishing, Fantagraphics, Ablaze, Zenescope, Action Lab Entertainment, American Mythology, Avatar Press, Battle Quest Comics, and Paizo Inc. all have had stipulations released delaying action in their cases.

Each are fighting over that “consignment stock” and the stipulations extend the time for responses. In October, Diamond launched cases against individual publishers over that stock.

In December, Diamond’s chapter 11 was converted to chapter 7 with a stay in place until February 16, 2026.

So, when it comes to all of these side lawsuits and fights, responses are now delayed until that date, February 16. So, whatever comes next, we have a month before we’ll find out.

Sparkle vs. Alliance? Yeah, that’s still going on too!

Diamond‘s chapter 11 process has spun out enough drama that it’s worthy of a television miniseries. There’s multiple lawsuits dealing with it and of course a fight over the chapter 11 process itself. One of those is Ad Populum/Sparkle Pop, one of the winners of Diamond’s assets, suing Alliance Entertainment (one of the bidders) over broken NDAs and corporate espionage. That lawsuit launched in June 2025 with our last update in late July. So, let’s catch up!

Alliance attempted to dismiss the case which was opposed by Sparkle Pop with Diamond submitting more to try and support their motion.

A pretrial conference was held on November 10, 2025 to discuss the amended complaint by Sparkle Pop against Alliance as well as the motion to dismiss things and the opposition to that.

In early November, Alliance Entertainment motioned for sanctions in the “form of attorney’s fees and expenses, and for such other and further relief as
the Court may deem just and proper.”

In the motion, Alliance calls Sparkle Pop’s action “frivolous” and points that Diamond has its own claim for breach of the NDA against Alliance, so Sparkle Pop can’t have the right to do that. If Diamond can sue Alliance for breaching the NDA, then Sparkle Pop doesn’t is the short of it.

But, that didn’t last long because Alliance withdrew their motion for sanctions less than a week later…

Alliance was then informed November 14 they were missing their “Corporate Ownership Statement” and if it wasn’t filed by December 1, the case could be dismissed.

On the same day, an order was released denying Alliance’s motion to dismiss the lawsuit.

And to add to the fun, on November 17, 2025, Sparkle Pop was also informed they didn’t have a “Corporate Ownership Statement” and if it’s not filed by December 1, the case would be dismissed.

In a Thanksgiving treat, Alliance filed their answers to the amended complaint where they agree with or disagree with what Sparkle Pop claims in their complaint. Basically, are there basic facts they can agree on.

Sparkle Pop’s statement of ownership was eventually filed December 1. It states that Qanah Co, Inc. owns 10% or more interest in the company and there’s three other limited liability companies and one individual that make up Ad Populum and somehow doesn’t know the citizenship of that individual member.

Also on December 1, a discovery plan was submitted by the counsels.

That ownership document about Sparkle Pop? That got amended… they spelled the name of one of the owners incorrectly. It’s Qavah not Qanah.

So where do things stand? A final pre-trial conference is set for August 6, 2026 with a list of exhibits and witnesses to be filed at some point in the future.

Sparkle Pop vs. Dynamic Forces Lawsuit is Dismissed

One of the numerous lawsuits to spin out of Diamond’s chapter 11 has come to an end. A filing today has stated the lawsuit between Sparkle Pop and Dynamic Forces and counterclaim by Dynamic Forces and Sparkle Pop has been dismissed. A reason for the dismissal has not been given, just that it’s voluntary. In October, the lawsuit and fight between Dynamic and “old” Diamond ended with an agreement.

IT IS HEREBY STIPULATED AND AGREED by and between the undersigned that pursuant to Rule 41(a)(1)(A)(ii) and 41(c)(1) of the Federal Rules of Civil Procedure Plaintiff Sparkle Pop, LLC (“Sparkle Pop” or “Plaintiff”) hereby gives notice that the above-captioned action against Defendant Dynamic Forces, Inc. (“Dynamic” or “Defendant”);is voluntarily dismissed, without prejudice, and it is further stipulated and agreed that Defendant’s counterclaim (s) in the above-captioned action against the Plaintiff are voluntarily dismissed, without prejudice.

Dynamic Forces, aka Dynamite, responds to Sparkle Pop’s Breach of Contract Lawsuit. Files Counterclaim Against Sparkle Pop!

Dynamite Entertainment

In mid-September, Sparkle Pop filed a lawsuit against Dynamic Forces, aka Dynamite Entertainment, for what it claims as breach of contract. Sparkle Pop is the new entity that has taken over Diamond Comic Distributors in its chapter 11 process. Sparkle Pop claims Dynamic has “made millions of dollars from its long-standing commercial relationship” but “failed to reimburse Plaintiff for certain costs incurred.” The lawsuit is an attempt to recover those costs. The lawsuit claims that Dynamic was to reimburse Diamond for “storage fees, freight costs, certain marketing-related expenses, and other costs.” Sparkle Pop is looking for damages including interest and costs, disbursements, and attorney’s fees. Dynamic and Dynamite are suing Sparkle Pop/”new” Diamond and claiming they are owed over $500,000 themselves.

Now, Dynamic has responded to Sparkle Pop’s claims and…. filed a counterclaim seeking damages from Sparkle Pop!

Dynamic’s response gets right into things, admitting to simple statement of facts while denying much of the rest. This is a pretty standard response but there are some highlights:

Under Parties: “Denied in part, Sparkle Pop is not the holder of all right title and interest to the assets and receivables owing to Diamond Comic Distributors (“DCD”) pursuant to an Order of the United States Bankruptcy Court for the District of Maryland”

Under Factual Allegations: “denied that any contract, receivable, and/or consignment related to Dynamic was purchased through the DCD Bankruptcy sale.”

Those two are setting it up that Sparkle doesn’t have the rights to the claim/contract it’s suing under. In short, old Diamond should be the one suing if anyone, and that was settled it would seem.

Now, to the counts.

Breach of Contract

…denied that Dynamic agreed to pay for certain fees and expenses incurred by DCD at all times relevant to the claims asserted in this matter.

And with all of that denial, Dynamic has requested the judge to rule against Sparkle Pop. It then lists a whole lot of reasons that Sparkle Pop doesn’t have an argument and failed to make its case.

But, where it gets interesting is that Dynamic has included a counterclaim in their response.

In it, Dynamic focuses on the consigned goods, a heated point of contention. When Sparkle Pop purchased Diamond’s assets, it didn’t purchase the consigned goods. But, Sparkle Pop wound up selling those goods and pocketed the money. They’ve been called out and the money is currently is sitting in a bank account controlled by the court until a decision is made as to who “owns” the consigned goods that remain and the ones that have been sold. None of that can be argued.

Because of that, Dynamic is going after Sparkle Pop for the sale of the goods in the amount of $644,403.35 plus attorneys fees and more.

This one should be interesting since it’s now a fact in the court and Sparkle Pop has admitted to doing exactly what Dynamic has claimed.

Dynamic is seeking damages, interest, costs and disbursements. The challenge will be the current ongoing debate in court about the consigned goods and who has a right to them, which is still in the process of being determined.

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