Diamond bankruptcy settlement hits snag as Sparkle Pop files objection

A settlement in the bankruptcy of distributor Diamond Comic Distributor was reached last month, but this week the company holding the warehouse assets of Diamond, Sparkle Pop, filed an objection. The settlement would have returned consignment inventory that has been held since January 2025 to be returned to companies including Paizo and Green Ronin, while $892,913 held in escrow from sales Sparkle Pop made of that held inventory would go to the Diamond Estate to pay off debts.

In their objection, Sparkle Pop claims they are owed $1 million in rent for the warehouse that holds the consignment inventory along with $433,270 in processing fees for the inventory it has sold. Another objection to the settlement is that it would allow third party companies to retrieve the inventory, arguing that the warehouse is a working distribution center with “floor-to-ceiling pallet racks requiring specialized equipment and trained operators”.

Sparkle Pop previously attempted to seize the inventory for unpaid rent in June, but that motion was denied.

Green Ronin Publishing, one of the members of the settlement, released a statement on the GoFundMe page for their legal expenses fighting for the return of their inventory:

We are, at long last, moving towards a resolution of our dispute with Diamond and if all goes well, we will be getting our books back before Xmas. As you may recall, the bankruptcy court appointed a trustee to oversee the liquidation of the remaining Diamond assets (the majority were bought by two companies, Universal Distribution and Sparkle Pop, last year). Last month the trustee and our group submitted a proposed settlement to the judge. Before anything else happens, the judge will have to accept the proposal. After that, there is still the matter of getting our books out of the Mississippi warehouse, which Sparkle Pop now owns. You know that saying that possession is nine-tenths of the law? Well, I won’t feel comfortable until our long-held hostage stock is out of that warehouse.

Our group, the Ad Hoc Committee of Consigners, must give some things up in this deal. Notably, a pot of money the court is holding from sales Sparkle Pop made after it had been ordered to stop selling. Green Ronin, thankfully, only has a small amount of money in this pot, but some of our cohort companies are giving up substantial cash to tie this all up. In addition to getting our product back, we’ll also be clear of our old contract for good and free from various forms of legal jeopardy that have come up in this case. It’s not everything our group wanted, but it’s a good deal for us nonetheless. Everyone just wants this resolved and over. I must once again give kudos to our lawyer Cate, who has been a rockstar throughout this process.

The next time I update I will hopefully be able to tell you that our books are safely in our warehouse. As always, thank you for all your support. We’d have lost all our consigned books without the money to put up a legal defense.

Thanks,
Chris

“Consignment inventory” is when a publisher or other manufactuere/wholesaler provides product to a distributor to sell on their behalf, with the consignment seller getting a portion of the sale price. The inventory still belongs to the publisher during this time.

 

[Morrus]

Well, sort of. Retailers generally buy things from distributors in bulk – it is unlikely that that Expanse book will be the only thing that FLGS is ordering. And on larger orders the shipping gets split more ways.

I was talking about the publisher, not the retailer. If you buy from a store, the publisher only got half the cover price. If you buy direct, they get the full cover price, but you paid the shipping.

In effect, the burden of the shipping/distro cost is shifted from you to the publisher if you buy in a store rather than direct.

So depending on your goal—if it’s to get the book at a good price, obviously buy from a store. Or Amazon. If it’s to support the publisher, that is better accomplished by buying direct from them.

 

[Thierry-Advent]

The shipping always has to be paid by somebody--it never becomes free. If you buy from a game store, Green Ronin has paid for the shipping (as in, they lose half the cover price via the distro model). If your goal is to support the publisher, buy direct from them. But then you have to pay shipping, instead of them. Yes, the system sucks. But somebody has to pay the shipping--you, or them.

Book: $92.00 CAD
Shipping to Canada via Green Ronin: $40.00
Duty determined by Fedex at border: probably around $40 because that is what I paid last time for the Dragonbane Bestiary. Which is the last time I ordered a RPG directly from the US.

So no, I'm not going to pay $80 of (shipping + duty) for a book worth $92. edit: Even less because it would put $40 in the pockets of the Weirdo who has been pummelling Canada for a year now.

I've already supported them buying PDFs during the crisis and backed Wardens of the Bluerose Campaign.

 

[Morrus]

So no, I'm not going to pay $80 of (shipping + duty) for a book worth $92.

Yes, I am aware.

It has to suck for somebody. Either you or the publisher.

 

[SableWyvern]

Yeah, I couldn't really say in the article because it's not professional to get snarky and I don't know for sure if that's what they mean, but I guess technically "a forklift" is specialized equipment and "forklift certification" is training for operators. Which are things every shipping company would have.

My take was they're saying, "Not only are we owed money for existing, unpaid storage fees, but we are expected to provide (free of charge) the staff and equipment that will be used when other creditors come to claim the stock we could be using to recoup some of our losses."

Now, I don't know how reasonable that complaint is once all factors are taken into account, but I don't see any reason to dismiss it out of hand.

 

[mamba]

So no, I'm not going to pay $80 of (shipping + duty) for a book worth $92. edit: Even less because it would put $40 in the pockets of the Weirdo who has been pummelling Canada for a year now.

what $40 would go to the US? The postage? It’s not the tariff if this is shipped from the US to Canada, that goes to Canada

 

[Jacob Vardy]

“floor-to-ceiling pallet racks requiring specialized equipment and trained operators”.'

I've done that job (moving pallets of books on a frame). It is a little bit dangerous. You have multiple tons of books on racks above head height. However, it is no too hard to pick up. The "knack" or skill in the job is knowing where everything is so you can do it quickly, and planning ahead so that you don't waste time playing tetris with pallets of books (pallet loads frequently have irregular shapes).

I am dubious that it would be a big problem for these small publishers to pick up their stock. Depending on how big the warehouse is, 20 minutes to get the first pallet out, 10 minutes for every subsequent pallet. The work required is negligable.

 

[Abstruse]

My take was they're saying, "Not only are we owed money for existing, unpaid storage fees, but we are expected to provide (free of charge) the staff and equipment that will be used when other creditors come to claim the stock we could be using to recoup some of our losses."

Now, I don't know how reasonable that complaint is once all factors are taken into account, but I don't see any reason to dismiss it out of hand.

The opposite. The settlement allowed for companies to send their own shipping and logistics teams in to retrieve the inventory - basically, Paizo could hire their own people to go down to the warehouse and get their books and games using their own staff and equipment. Sparkle Pop is objecting to that, saying that nobody can touch the inventory in the warehouse except for their own people because of special "training" and "equipment".

 

[SableWyvern]

The opposite. The settlement allowed for companies to send their own shipping and logistics teams in to retrieve the inventory - basically, Paizo could hire their own people to go down to the warehouse and get their books and games using their own staff and equipment. Sparkle Pop is objecting to that, saying that nobody can touch the inventory in the warehouse except for their own people because of special "training" and "equipment".

Ah, OK. That does feel a lot more like throwing every little bit of muck they can find at the wall and just hoping something sticks.

 

[billd91]

Book: $92.00 CAD
Shipping to Canada via Green Ronin: $40.00
Duty determined by Fedex at border: probably around $40 because that is what I paid last time for the Dragonbane Bestiary. Which is the last time I ordered a RPG directly from the US.

So no, I'm not going to pay $80 of (shipping + duty) for a book worth $92. edit: Even less because it would put $40 in the pockets of the Weirdo who has been pummelling Canada for a year now.

I've already supported them buying PDFs during the crisis and backed Wardens of the Bluerose Campaign.

Fair enough. That's a pretty high premium to put on an individual book when, by comparison, I'd expect the per unit cost to ship to a distributor would be a lot less for GR. I mean, that's got to be one of the reasons game publishers use distributors in the first place - they gain certain savings that the distributor bears the cost of (and then the FLGS does, in turn, from the distributor).

 

[Parmandur]

My take was they're saying, "Not only are we owed money for existing, unpaid storage fees, but we are expected to provide (free of charge) the staff and equipment that will be used when other creditors come to claim the stock we could be using to recoup some of our losses."

Now, I don't know how reasonable that complaint is once all factors are taken into account, but I don't see any reason to dismiss it out of hand.

Based on my experience in logistics...actually not unreasonable.