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Comic Exporters, Comic Holdings to Sell Diamond UK to New Company Diamond Distributors UK
posted on by Adriana Hazra
Chapter 11 Bankruptcy Claim
Diamond is one of the primary distributors of print comics in the United States, particularly to the "direct market" of comic specialty stores. Diamond Select Toys produces toys based on several brands including Godzilla, Mighty Morphin Power Rangers, and Transformers.
Diamond announced on January 14 that it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court in the District of Maryland. Companies who file under Chapter 11 are able to maintain business assets, which may or may not include licenses, in order to attempt to reorganize. The business can continue operating as it reorganizes its debts under court-supervision and potentially resume operation as a healthy business. This is opposed to a Chapter 7 bankruptcy, in which a business shutters its doors and ends operations. A trustee had requested on April 28 that Diamond move from Chapter 11 to Chapter 7 because it had not filled out necessary monthly reports, but Diamond eventually agreed to fill the reports. Diamond cited that the decreased consumer activity, rising operating costs, and declining sales in the comic book industry post-COVID-19 led to its decision.
Diamond continues to operate business during this time, with orders continuing to process as usual.
Background
Canadian comics distributor Universal Distribution and pop culture manufacturer and licensor Ad Populum acquired Diamond's assets in a joint acquisition on May 16. Universal acquired the assets of Alliance Game Distributors, while Ad Populum acquired the assets of Diamond Comic Distributors, Diamond Book Distributors, Diamond Select Toys & Collectibles, Collectible Grading Authority, and other assets.
Alliance Entertainment had announced on March 25 that it won the bid to acquire Diamond Comics Distributors' assets. Then, a few days prior to a court date of April 7 to approve the sale to Alliance, the owners of Diamond Comics Distributors made an attempt to change the sale of ownership to a smaller joint bid by Universal Distribution and Ad Populum. Alliance in response filed a lawsuit on the same day to block the change in sale.
After this attempted legal battle over the new ownership, the Bankruptcy Court for the District of Maryland approved the sale to Alliance on April 11. Alliance dropped the lawsuit against Diamond Comics as a result. The final date for the closing of the sale was slated for April 25, before the turn of events with Alliance terminating the sale agreement.
However, Alliance Entertainment announced on April 24 through a U.S. Securities and Exchange Commission (SEC) notice that it had terminated the agreement to purchase "substantially all" of Diamond Comics Distributors' assets. The company then filed another lawsuit against Diamond later that week claiming that the debtor did not timely indicate that its largest vendor Wizards of the Coast had not renewed its expiring agreement with Diamond. The lawsuit asserted that this fraudulent misrepresentation was part of a "scheme" to lead Alliance to purchase the assets for much more than its value. Wizards of the Coast's agreement with Diamond expired on April 30. Diamond had informed Alliiance on April 17, but allegedly knew of this since December 2024.
Diamond had received a US$39 million stalking horse bid, the initial bid on a bankrupt company's assets, from an affiliate of Universal Distribution for Alliance Game Distributors. Diamond signed a Non-Binding Letter of Intent with the same company to buy Diamond UK. Diamond is also actively pursuing offers and has received interest from buyers for its other business units, which include: Diamond Book Distributors, Collectible Grading Authority, Diamond Select Toys, and its main distribution lines.
Penguin Random House Publisher Services notified clients on May 21 that it would no longer offer books through Diamond Comic Distributors as a sub-distributor, with the final order cutoff date for products set for May 26, and final day on sale on June 25. The move affects Marvel Comics, Dark Horse Comics, IDW Publishing, and BOOM! Studios among others, with Kodansha USA Publishing possibly also affected (the company is a distribution client for PRH Publisher Services).
Source: Press release
