Diamond Distributors Asks Bankruptcy Court For Ownership of Publishers' Consignment Inventory [UPDATED]

Diamond Comic Distributors--which filed for bankruptcy in January--has asked the bankruptcy court to allow it to sell its consignment inventory in order to pay off its creditors.

Consignment inventory is stock which the distributor stores but does not own (as opposed to stock which the distributor has purchased from the manufacturer). The distributor then sells the books via retail stores. The manufacturer or publisher does not get paid until the stock is sold at retail--typically receiving 30%-50% of the retail price (the rest going to the retail store and the distributor itself).

Diamond has listed 128 companies [see below] for which it currently holds consignment stock. Some of these are tabletop game companies, as well as many comic-book publishers, and include Goodman Games, Green Ronin, and Paizo Publishing. Others include comic-book publishers like Marvel and DC, along with a number of toy companies. Some publishers are saying that they are owed payments for retail sales from late 2024, just prior to Diamond's bankruptcy filing in January 2025, in addition to having stock currently in Diamond's possession.

Normally, unsold stock, which still belongs to the publishers, would be returned to them. Diamond has asked the bankruptcy court to allow it to take ownership of that stock and sell it for the benefit of its creditors.

One of Diamond's biggest creditors is Chase Bank, which will likely be at the top of the priority list of creditors to be reimbursed.

In its filing, Diamond says it is in possession of "significant inventory that was shipped… on a consignment basis" and that "consignors have not satisfied the requirements under applicable law to perfect their interests in this consigned inventory". Diamond claims that this gives them the right to "transfer title to this inventory free and clear of the consignor's interests". Essentially, some important paperwork (a 'U.C.C.-1 financing statement') was not filed by consignment vendors like Marvel, DC, and the tabletop gaming companies mentioned earlier prior to the bankruptcy in January, and this means that they forfeit their rights to the stock in question. Diamond's filing says "None of the vendors that provided consigned inventory to any of the Debtors filed a U.C.C.-1 financing statement against any of the Debtors prior to the Petition Date."

Following the closing of the sales of a substantial majority of their assets, the Debtors are in possession of significant inventory that was shipped to the Debtors on a consignment basis.

1. The consignors have not satisfied the requirements under applicable law to perfect their interests in this consigned inventory. As further explained below, this give the Debtors the right to transfer title to this inventory free and clear of the consignor’s interests.
2. The Debtors accordingly seek to sell or otherwise dispose of the consigned inventory free and clear of the interests, if any, of the consignors.
3. To that end, the Debtors seek approval of Consignment Sale Procedures (as described and defined herein) to permit them to market, sell, and/or otherwise dispose of consigned inventory expeditiously, minimizing costs and maximizing recoveries in order to generate the best result for the estates.

UPDATE -- Paizo Publishing has announced that its upcoming releases will not be available at major bookstores or at Amazon because the company has stopped shipping products to Diamond. This includes 12 August releases and 10 September releases, such as Starfinder Player Core, Starfinder GM Core, Pathfinder Battlecry, and more.

The court has scheduled a hearing on July 21 to hear objections from the affected vendors. The full list of vendors can be seen below.

List of Consignment Vendors

1. 12 Gauge Comics LLC
2. 801 Media Inc
3. A Wave Blue World Inc
4. Ablaze
5. Abstract Studios
6. Ack Comics (Amar Chitra Katha)
7. Action Lab Entertainment
8. Aftershock Comics
9. Ahoy Comics
10. Ait/Planetlar
11. Albatross Funnybooks
12. Alien Books
13. American Mythology Productions
14. Antarctic Press
15. Ape Entertainment
16. Apex Publishing LLC
17. Archaia Studios Press
18. Archie Comic Publications
19. Artists Writers & Artisans Inc
20. Aspen Mlt Inc
21. Avatar Press Inc
22. Bad Egg LLC
23. Bandai Entertainment Inc
24. Battle Quest Comics
25. Bedside Press
26. Behemoth Entertainment LLC
27. Benitez Productions
28. Black Mask Comics
29. Black Panel Press
30. Blind Ferret Entertainment Inc
31. Boom Entertainment
32. Bundoran Press Publishing House
33. Chizine Publications
34. Clover Press LLC
35. Cryptozoic Entertainment
36. Dark Horse Comics
37. DC Comics
38. Desperado Publishing
39. Diamond Comic Dist.-Stock
40. Difference Engine Pte LTD
41. Digital Manga Distribution
42. Drawn & Quarterly
43. Dstlry Media
44. Dynamic Forces
45. Eros Comix
46. Eureka Productions
47. Fairsquare Graphics
48. Fantagraphics Books
49. Fiery Studios Inc
50. Frank Miller Presents LLC
51. G T Labs
52. Gemstone Publishing
53. Gen Manga Entertainment
54. Gold Key Entertainment
55. Good Trouble Productions LLC
56. Goodman Games LLC
57. Graphic Mundi – Psu Press
58. Graphitti Designs
59. Green Ronin Publishing
60. Gungnir Entertainment
61. Heavy Metal Magazine
62. Hermes Press
63. Humanoids Inc
64. Idw – Top Shelf
65. Idw Publishing
66. Image
67. Image Comics
68. Joe Books Inc.
69. Laguna Studios
70. Les Editions Pix’N Love
71. Lev Gleason
72. Lion Forge
73. Lionwing Publishing LTD
74. Living The Line
75. Locust Moon Press
76. Mad Cave Studios
77. Magma Comix
78. Magnetic Press Inc.
79. Manga Classics Inc.
80. Marvel Comics
81. Marvel Prh
82. Massive
83. Moonstone
84. Nbm
85. Netcomics
86. Night Shade Books
87. Norma Editorial S.A.
88. Oni Press Inc.
89. Opus Comics LTD
90. Paizo Inc
91. Panini UK LTD
92. Papercutz Inc
93. Pegamoose Press
94. Prime Books LLC
95. Rabbit Publishers
96. Radical Publishing
97. Red Giant Entertainment
98. Renaissance Press
99. Roll For Combat
100. S7 Games
101. Scout Comics
102. Sea Lion Books
103. Seven Seas Ghost Ship
104. Slave Labor Graphics
105. Soaring Penguin Press
106. Source Point Press
107. Starburns Industries Press
108. Storm King Productions Inc
109. Sumerian Comics
110. T Pub
111. Th3Rd World Studios
112. Titan Comics
113. Tokyopop
114. Toonhound Studios LLC
115. Twomorrows Publishing
116. Ubiworkshop
117. Udon Entertainment Inc
118. Valiant Entertainment LLC
119. Vault Comics
120. Wicked Cow Studios LLC
121. Wildside Press LLC
122. William M Gaines, Via Gemstone
123. William M. Gaines Agent, Inc.
124. Wyrm Publishing
125. Yaoi Press LLC
126. Z2 Comics
127. Zenescope Entertainment Inc
128. Zombie Love Studios

 

[Wofano Wotanto]

Many publishers have warehouses or fulfilment partners on both sides of the Atlantic. We’re tiny, but even we have warehouses in the US, UK, and Australia. Product is then shipped from the appropriate destination. No transatlantic shipping charges.

You're only "tiny" by a fairly narrow set of standards, at least for the gaming industry. I deal with a number of one- and two-man miniature casters in the UK and they don't have any kind of access to that sort of thing. It used to be more common to license a local-ish company to cast for you (eg Ground Zero Games had a long-lasting arrangement with the long-defunct Geo-Hex and...cripes, I can't remember the Australian company now...to produce Full Thrust and Stargrunt figs) but these days it's rare to see. Best you can hope for is to get a retail store or semi-distributor to do occasional big stock orders to sell (eg the ways Scale Creep carries imported Brigade minis).

How long their business model can survive I don't know, but Jon at GZG has kept his plates spinning for 40 years now and has a back catalog that's larger than many firms with a dozen or more full-time staff. I strongly suspect he's got a cloning vat in his guest bedroom or something because no one man should be able to do everything he does.

 

[Morrus]

You're only "tiny" by a fairly narrow set of standards, at least for the gaming industry. I deal with a number of one- and two-man miniature casters in the UK and they don't have any kind of access to that sort of thing.

We have two employees—me and Jessica—working from home. The only way the company could be smaller is to have only one employee. We are tiny. The average local corner shop is a significantly bigger business than ENP. It has a premises and likely more than two employees.

 

[Wofano Wotanto]

I've taught about a thousand people to play D&D over 30 years, and I can't even tell you what most of them do for a living.

Me neither when it comes to people I'm teaching (who I often only see for a demo game or three), but tables where I'm a player myself or a long-time GM stand out more for me. Especially true of people with other interests/jobs that come in handy for the game.

Not just RPGs either. Best miniatures group I was ever part of included two carpenters, an electrician, and (between myself and another guy) two folks with part-time jobs at a resin terrain casting firm. About the only we couldn't do for ourselves was casting the minis themselves, and the last time I talked to the one guy I keep in touch with he was getting into 3D printing for that.

The custom table setups were something to behold, I'll tell you.

We have two employees—me and Jessica—working from home. The only way the company could be smaller is to have only one employee. We are tiny. The average local corner shop is a significantly bigger business than ENP. It has a premises and likely more than two employees.

I'll grant you, that's tiny. Assume you have outside creators writing and drawing stuff, but even GZG and Brigade use some freelancers to sculpt masters, although they still do a lot of that themselves. I note Brigade has gotten a production license from some artist who sells his STLs directly, and are offering physical prints of the models. Should be interesting to see how that works out. The STLs are vastly cheaper, especially for larger models (all 28mm scifi so far) but access to 3D printing is along way from universal yet, and paying to have it done on someone else's machine spikes the price too.

Thankfully not something most RPG publishers have to worry about much, but STLs are likely to become the pdf option for the whole minis industry over time.

 

[Von Ether]

A fair number of publishers were already increasing efforts to sell direct to customers because of various long-standing and systemic problems with distribution and retail, and this latest disaster will only increase that number. The margins are much better for the publisher, but it's a short-term gain and a likely long-term loss. Distribution and retail gets your game in front of people who may not already know it exists. That's an important way to potentially grow your audience.

Very true, but distributors have not been doing this well for sometime. I've lost track of how many times I've tried to order something through the FLGS and had no luck. If it's not a top seller, you take your chances.

Ironically I've had indie publishing company that were begging to be on consignment only a year ago but they were denied.

 

[barasawa]

View attachment 410255​

Diamond Comic Distributors--which filed for bankruptcy in January--has asked the bankruptcy court to allow it to sell its consignment inventory in order to pay off its creditors.

Consignment inventory is stock which the distributor stores but does not own (as opposed to stock which the distributor has purchased from the manufacturer). The distributor then sells the books via retail stores. The manufacturer or publisher does not get paid until the stock is sold at retail--typically receiving 30%-50% of the retail price (the rest going to the retail store and the distributor itself).

Diamond has listed 128 companies [see below] for which it currently holds consignment stock. Some of these are tabletop game companies, as well as many comic-book publishers, and include Goodman Games, Green Ronin, and Paizo Publishing. Others include comic-book publishers like Marvel and DC, along with a number of toy companies. Some publishers are saying that they are owed payments for retail sales from late 2024, just prior to Diamond's bankruptcy filing in January 2025, in addition to having stock currently in Diamond's possession.

Normally, unsold stock, which still belongs to the publishers, would be returned to them. Diamond has asked the bankruptcy court to allow it to take ownership of that stock and sell it for the benefit of its creditors.

One of Diamond's biggest creditors is Chase Bank, which will likely be at the top of the priority list of creditors to be reimbursed.

In its filing, Diamond says it is in possession of "significant inventory that was shipped… on a consignment basis" and that "consignors have not satisfied the requirements under applicable law to perfect their interests in this consigned inventory". Diamond claims that this gives them the right to "transfer title to this inventory free and clear of the consignor's interests". Essentially, some important paperwork (a 'U.C.C.-1 financing statement') was not filed by consignment vendors like Marvel, DC, and the tabletop gaming companies mentioned earlier prior to the bankruptcy in January, and this means that they forfeit their rights to the stock in question. Diamond's filing says "None of the vendors that provided consigned inventory to any of the Debtors filed a U.C.C.-1 financing statement against any of the Debtors prior to the Petition Date."

Following the closing of the sales of a substantial majority of their assets, the Debtors are in possession of significant inventory that was shipped to the Debtors on a consignment basis.

1. The consignors have not satisfied the requirements under applicable law to perfect their interests in this consigned inventory. As further explained below, this give the Debtors the right to transfer title to this inventory free and clear of the consignor’s interests.
2. The Debtors accordingly seek to sell or otherwise dispose of the consigned inventory free and clear of the interests, if any, of the consignors.
3. To that end, the Debtors seek approval of Consignment Sale Procedures (as described and defined herein) to permit them to market, sell, and/or otherwise dispose of consigned inventory expeditiously, minimizing costs and maximizing recoveries in order to generate the best result for the estates.

UPDATE -- Paizo Publishing has announced that its upcoming releases will not be available at major bookstores or at Amazon because the company has stopped shipping products to Diamond. This includes 12 August releases and 10 September releases, such as Starfinder Player Core, Starfinder GM Core, Pathfinder Battlecry, and more.

The court has scheduled a hearing on July 21 to hear objections from the affected vendors. The full list of vendors can be seen below.

List of Consignment Vendors

1. 12 Gauge Comics LLC
2. 801 Media Inc
3. A Wave Blue World Inc
4. Ablaze
5. Abstract Studios
6. Ack Comics (Amar Chitra Katha)
7. Action Lab Entertainment
8. Aftershock Comics
9. Ahoy Comics
10. Ait/Planetlar
11. Albatross Funnybooks
12. Alien Books
13. American Mythology Productions
14. Antarctic Press
15. Ape Entertainment
16. Apex Publishing LLC
17. Archaia Studios Press
18. Archie Comic Publications
19. Artists Writers & Artisans Inc
20. Aspen Mlt Inc
21. Avatar Press Inc
22. Bad Egg LLC
23. Bandai Entertainment Inc
24. Battle Quest Comics
25. Bedside Press
26. Behemoth Entertainment LLC
27. Benitez Productions
28. Black Mask Comics
29. Black Panel Press
30. Blind Ferret Entertainment Inc
31. Boom Entertainment
32. Bundoran Press Publishing House
33. Chizine Publications
34. Clover Press LLC
35. Cryptozoic Entertainment
36. Dark Horse Comics
37. DC Comics
38. Desperado Publishing
39. Diamond Comic Dist.-Stock
40. Difference Engine Pte LTD
41. Digital Manga Distribution
42. Drawn & Quarterly
43. Dstlry Media
44. Dynamic Forces
45. Eros Comix
46. Eureka Productions
47. Fairsquare Graphics
48. Fantagraphics Books
49. Fiery Studios Inc
50. Frank Miller Presents LLC
51. G T Labs
52. Gemstone Publishing
53. Gen Manga Entertainment
54. Gold Key Entertainment
55. Good Trouble Productions LLC
56. Goodman Games LLC
57. Graphic Mundi – Psu Press
58. Graphitti Designs
59. Green Ronin Publishing
60. Gungnir Entertainment
61. Heavy Metal Magazine
62. Hermes Press
63. Humanoids Inc
64. Idw – Top Shelf
65. Idw Publishing
66. Image
67. Image Comics
68. Joe Books Inc.
69. Laguna Studios
70. Les Editions Pix’N Love
71. Lev Gleason
72. Lion Forge
73. Lionwing Publishing LTD
74. Living The Line
75. Locust Moon Press
76. Mad Cave Studios
77. Magma Comix
78. Magnetic Press Inc.
79. Manga Classics Inc.
80. Marvel Comics
81. Marvel Prh
82. Massive
83. Moonstone
84. Nbm
85. Netcomics
86. Night Shade Books
87. Norma Editorial S.A.
88. Oni Press Inc.
89. Opus Comics LTD
90. Paizo Inc
91. Panini UK LTD
92. Papercutz Inc
93. Pegamoose Press
94. Prime Books LLC
95. Rabbit Publishers
96. Radical Publishing
97. Red Giant Entertainment
98. Renaissance Press
99. Roll For Combat
100. S7 Games
101. Scout Comics
102. Sea Lion Books
103. Seven Seas Ghost Ship
104. Slave Labor Graphics
105. Soaring Penguin Press
106. Source Point Press
107. Starburns Industries Press
108. Storm King Productions Inc
109. Sumerian Comics
110. T Pub
111. Th3Rd World Studios
112. Titan Comics
113. Tokyopop
114. Toonhound Studios LLC
115. Twomorrows Publishing
116. Ubiworkshop
117. Udon Entertainment Inc
118. Valiant Entertainment LLC
119. Vault Comics
120. Wicked Cow Studios LLC
121. Wildside Press LLC
122. William M Gaines, Via Gemstone
123. William M. Gaines Agent, Inc.
124. Wyrm Publishing
125. Yaoi Press LLC
126. Z2 Comics
127. Zenescope Entertainment Inc
128. Zombie Love Studios

So basically the products they were hired to sell on the basis that they'd get part of the proceeds from the sale of said products as their payment, they now want to steal ownership those other companies goods, and sell them off keeping all the money including that belonging to the other companies just to pay their company (Diamond) can use it to settle their other debts and are actually trying to get a judge to sign off on this outright theft scam... (ianal)

Wow, talk about large scale heists...
I wonder if the companies that ditched Diamond before this happened realized there was something wrong with Diamond. (Most of the smaller companies being screwed didn't really have a choice, it was Diamond or no products. I've had discussions with people that ran a FLGS back in the day as we tried to find alternate means to obtain certain products.)

 

[Jd Smith1]

So basically the products they were hired to sell on the basis that they'd get part of the proceeds from the sale of said products as their payment, they now want to steal ownership those other companies goods, and sell them off keeping all the money including that belonging to the other companies just to pay their company (Diamond) can use it to settle their other debts and are actually trying to get a judge to sign off on this outright theft scam... (ianal)

Wow, talk about large scale heists...
I wonder if the companies that ditched Diamond before this happened realized there was something wrong with Diamond. (Most of the smaller companies being screwed didn't really have a choice, it was Diamond or no products. I've had discussions with people that ran a FLGS back in the day as we tried to find alternate means to obtain certain products.)

As has been explained repeatedly in this thread, this is not a scam, nor a 'heist' (nor the 1920s, see), nor is there stealing involved. Nor is this out of the ordinary.

This is usual practice. The court is simply looking to transform remaining assets into cash in order to repay as any creditors as possible.

When you sign a distribution agreement in the USA, this is part of the boilerplate.

 

[Traveller]

Just a question about US law...
What is the employees stand in the creditor "line"?
In other countries I know of, they have higher position than some of the other creditors and monies recovered can help pay owed salaries and benefits.

 

[JLowder]

As has been explained repeatedly in this thread, this is not a scam, nor a 'heist' (nor the 1920s, see), nor is there stealing involved. Nor is this out of the ordinary.

This is usual practice. The court is simply looking to transform remaining assets into cash in order to repay as any creditors as possible.

When you sign a distribution agreement in the USA, this is part of the boilerplate.

All of which speaks to how predatory some major hobby market businesses, especially in the US, have become, and how careful you have to be about boilerplate.

Publishers regularly use liquidation as a way to shuck off debts while selling IP (including IP they have not paid for) for profit in ways that also should be illegal. The only real protection from this IP washing is for creators and licensors not to accept boilerplate language, to insist on language that protects you and your work from this sort of predatory behavior.

 

[Morrus]

As has been explained repeatedly in this thread, this is not a scam, nor a 'heist' (nor the 1920s, see), nor is there stealing involved. Nor is this out of the ordinary.

This is usual practice. The court is simply looking to transform remaining assets into cash in order to repay as any creditors as possible.

When you sign a distribution agreement in the USA, this is part of the boilerplate.

Sure, people are being hyperbolic. What they mean is "this sucks and is unfair".

Which you know, I'm sure.

 

[Garwalf]

While it's not directly related to the Diamond bankruptcy, the New York Times just published a review of a book about private equity firms and what the consequences are of their takeover of different companies. The book is Bad Company: Private Equity and the Death of the American Dream by Megan Greenwell.

I don't know if Ad Populum (Diamond's new owners) are technically a private equity firm, but their business practices sure sound like those of other companies described in the review.