A lot has happened since the blockbuster January 2025 announcement that Diamond Comics Distributors declared bankruptcy. In April and May 2025, a Baltimore bankruptcy court approved the fragmentation and sale of Diamond Distributors to two corporations, Universal Entertainment and Ad Populum/Sparkle Pop. Diamond Distributors would later change its name to DCD II to differentiate itself from its bankrupt predecessor. DCD II would then file motions to stop Ad Populum/Sparkle Pop from selling and profiting from the sale of consignment inventory still viable in the previous Diamond Distribution system.
Consignment Inventory Legal Limbo
Millions of comic books that were in the distribution and inventory system of the former Diamond Distributors are now in legal limbo. Since Diamond’s fragmentation and sale, DCD II has filed court motions stating that the inventory belongs to them. Additionally, DCD II wants the inventory to be liquidated to pay its debtors during its ongoing bankruptcy process.
Sparkle Pop has been selling some of that previous Diamond inventory for weeks now and has made over $1.3 million. DCD II recently filed a motion with the bankruptcy court to stop Sparkle Pop from selling the consignment inventory and forfeit the profits to the court. The court recently approved that motion.
Meanwhile, a group of comic book publishers has legally banded together to stake their claim to the inventory, since they technically claim it’s their consignment property that the former Diamond was supposed to distribute. This Ad Hoc Committee of publishers wants the court to hold all profits from any inventory sales in escrow until the court finally determines who legally owns it.
In response, DCD II would then file 31 adversary cases, or a type of lawsuit within bankruptcy proceedings, to prove they own the inventory, not the publishers.
The former Diamond Distributors, now run by its new owners, has laid off dozens of its staff. The iconic Previews order catalog, which retailers would use to make orders from hundreds of suppliers based on requests from consumers, is now defunct after 37 years.
What will be the consequences of these legal actions on the comics industry? Before we assess that question, let’s briefly recap what has been going on in the Diamond Distributors bankruptcy saga and how we got to this point.
Diamond Comics Distributors Declares Bankruptcy
Diamond was founded in Baltimore in 1981 by Steve Geppi. The company would publish Previews to take orders from retailers for its distribution system in 1988. By the late 1990s, Diamond was practically a distribution monopoly for the comic book industry.
If you wanted your comic book seen, you had to get into the Diamond distribution system.
Diamond’s distribution monopoly came to an end during the 2020 pandemic. Diamond shut down operations for almost two months. In the interim, smaller and competing distributors would fill the void. Diamond would file for Chapter 11 bankruptcy in January 2025 with debts of almost $73 million.
Diamond Sold Off and Fragmented
By April 30, Diamond would be fragmented and sold to the highest bidders of the bankruptcy proceedings: Canadian corporation Universal Entertainment and toy and IP acquisition corporation Ad Populum. Universal bought Diamond’s subsidiary Alliance Games Distributors for almost $50 million.
Ad Populum bought all of Diamond’s other assets for $7.5 million. AP is also the parent company of WizKids and NECA. Ad Populum would then create its own subsidiary, Sparkle Pop, to oversee operations for the new assets. The creation of these new ownership entities would soon set the stage for the consignment inventory legal drama to come.
The U.K. arm of Diamond, Diamond UK, is still under legal assessment for sale.
Diamond Name Change
A few days ago, Diamond legally changed its name to Diamond Comic Distributors II LLC, or DCD II. The name change differentiates the company from its bankrupt predecessor. Diamond also said it does business with a new bank, Key Bank.
Sparkle Pop Starts Selling the Consignment Inventory
Sparkle Pop began selling the consignment inventory, or the comics that have been sitting in the former Diamond’s distribution warehouse pipeline, shortly after purchase. However, Sparkle Pop did not have the court’s decision to do so, since Diamond’s bankruptcy motion is still ongoing. DCD II recently filed a motion to stop Sparkle Pop.
By early September, the court would order Sparkle Pop to stop selling the consignment inventory and stop listing the consignment inventory online as if it were for sale. Sparkle Pop was also ordered to turn over all proceeds to a court escrow account until the court decides how to pay Diamond’s debtors.
DCD II would file these motions with the understanding that the consignment inventory, which they contend was not part of the bankruptcy sale, belongs to them. However, the various comic book publishers who had the comics printed for Diamond to distribute made a legal case to stake their claims.
The Ad Hoc Committee of Consignors
Dozens of comic book publishers would file limited objections to the court to prevent Sparkle Pop or DCD II from claiming the consignment inventory. The Ad Hoc Committee wants the court to hold any profits from the sale of the consignment inventory in escrow.
In other words, the Ad Hoc Committee wants the court to hold the money until it decides who owns the consignment inventory. They also want the chance to claim their own respective ownership and potentially get a share of the proceeds. After all, they commissioned the printing of the comics bearing their logos and titles for Diamond to distribute to retailers.
DCD II’s Adversary Cases
DCD II recently filed adversary cases against 31 comic book publishers. These motions claim that the comic book publishers never filed a U.C.C.-1 form. This form gives the publisher a legal stake in the consignment inventory in question. So, DCD II is arguing that since these publishers never supplied these forms, they don’t own a stake in the inventory.
The Next Steps
The court should rule by September 30th on the ownership of the consignment inventory. Whether or not that spells the end of lawsuits or motion filing is another matter. Even if the issue between Sparkle Pop and DCD II is settled, there are dozens of comic book publishers who may feel otherwise.
The bankruptcy and dissolution of Diamond will change the data flow of product transactions between distributors, retailers, and consumers. Diamond was once the monopoly that would create a steady flow of valuable transactional data for the industry. \
Now, in an era of low comic book sales, comic book store closings, and an uncertain future, the end of Diamond will have a lot of consequences as new distributors continue to fill the void.
PFAdvice will provide more updates as they come in.
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