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

 

[Jd Smith1]

Business Law is mind boggling. Tariffs Now THIS??? I think Disney and Warner Bros. Lawyers could stop this but they will probably only settle for themselves and leave the others in the dust. Oh man. This is a nightmare for TTRPG companies that aren't HASBRO. Almost everyone distributed through Diamond. Diamond that BOUGHT UP the other distributors . What a Racket. I don't understand why this filing is even necessary. Robbers.

If disney and warner brothers use Diamond, stopping this would cost them money. If they could stop it.

This is how bankruptcies are done.

 

[Staffan]

Wait - what did I say? Yes. I meant that the actual production of the original material is the most expensive part, and whether it is physical or digital means less than people think it does.

Sure, companies prefer digital because they cut out all the middle-men and can be produced in unlimited quantities (at least theoretically) but the cost of producing a physical product is small compared to the cost of producing the content itself.

Yeah, the main potential savings in going digital would be cutting out one or two middle-men between the publisher and the final customer. The usual route for physical goods is publisher to distributor to retailer to customer, while for digital it's publisher to digital storefront to customer. In many cases the digital storefront can be operated by the publisher themselves, but in those cases they of course also assume the costs of running it.

 

[Morrus]

Yeah, the main potential savings in going digital would be cutting out one or two middle-men between the publisher and the final customer. The usual route for physical goods is publisher to distributor to retailer to customer,

Indeed. And you sell a product to the distributor at half retail price. Take out the production costs (and even the shipping--you have to ship pallets of books to the distributor) and you soon realise that the publisher is not making much out of the arrangement.

In many cases the digital storefront can be operated by the publisher themselves, but in those cases they of course also assume the costs of running it.

A Shopify storefront or something similar is fairly negligible, costwise. You can have a storefront up and running, selling and delivering your digital content, with a few clicks these days.

 

[Blue]

This is not good for the small publishers at all, nor is it good for anyone. At this point, stores should cease to do any business with Ad Populum forever. Also, if I'm a company selling products, I would push more and more for direct distribution to the stores and cut out the middlemen. If I was running a store, I would be trying to eliminate as many middlemen as possible because all they do is increase the costs to the stores and consumers. The middlemen are parasites on our industry.

I worked for 25 years for an international freight forwarder, one of those middlemen, or as you call them, parasites.

It much cheaper than for small companies to understand global customs, do filing in their local and foreign countries, negotiate prices with steamship (yes, they're called that) lines or air, get them in and out of the port itself, offer services like LCL (Less than container load) where they find others that also want the same service so you can share and split the costs of the containers.

For distributors like Diamond (but acting in good faith) the costs to physically transport in bulk, sharing transport means with other goods from other companies, as opposed to you mailing every hobby shop individually 2-3 pieces of product a month via USPS/FedEX/USPS, etc. Heck, just to have the connections to all of those shops, so they can look at the distributor's catalog and decide to carry your product instead of your small company trying to individually call up all of the FLGSs about.

You really are spouting something with confidence, "parasites" heh, that betrays a lack of knowledge of how these offer services and prices that are lower than the company could provide for themselves.

 

[SasquatchNightFever]

Relevant to the discussion: TwoMorrows publishing filed a legal objection.

TwoMorrows Legally Objects To Diamond Bankruptcy Liquidation Of Stock

TwoMorrows legally objects to the planned Diamond Comic Distributors, the debtors, liquidation of publishers' consignment inventory as part of bankruptcy proceedings.

bleedingcool.com

Here's the relevant text:

"I am writing to lodge my formal objection to this motion. Our inventory was sent to Debtors on a consignment basis per the terms of our Supply Agreement, and is our property, not Debtor's. My company has an ongoing financial interest in selling all merchandise that is still in Debtor's warehouse."

"Likewise, unsold products that have been returned by booksellers to Debtor's inventory remain our consigned property until payment to us has been made, and I object to Debtors continuing to sell those items without remitting payment to us."

"Debtor's efforts to circumvent paying us for our property will not only jeopardize my company's immediate future financially, but their flooding the market with our products at liquidated prices will hurt our long-term ability to sell those same products from our own warehouse's inventory at normal prices. It will also undercut sales of those products at our new distributor, Lunar Distribution (where we were forced to shift our business after Debtor's bankruptcy filing)."

"Additionally, I object to the hearing being held on July 21, 2025, and would request that it be delayed until after Comic-Con International: San Diego (the comics industry's leading trade show, where I and many other publishers will be in attendance). Comic-Con will be held from July 23-27, and I will be traveling July 21-30 in conjunction with it, so would respectfully request the hearing be rescheduled for August 1 or later."

 

[Morrus]

I worked for 25 years for an international freight forwarder, one of those middlemen, or as you call them, parasites.

It much cheaper than for small companies to understand global customs, do filing in their local and foreign countries, negotiate prices with steamship (yes, they're called that) lines or air, get them in and out of the port itself, offer services like LCL (Less than container load) where they find others that also want the same service so you can share and split the costs of the containers.

Umm. We small publishers do all that. Not the distrbutors.

We need to get them from the printer to our warehouses, and from there to the distributors in each region. For us, that's generally from the EU or China to our warehouses in the UK, US, and Australia; and then from there we fulfill orders from local distributors. This involves international freight shipping, customs, the whole works.

Heck, just to have the connections to all of those shops, so they can look at the distributor's catalog and decide to carry your product instead of your small company trying to individually call up all of the FLGSs about.

This is basically the big thing.

You really are spouting something with confidence, "parasites" heh, that betrays a lack of knowledge of how these offer services

That's an unfortunate statement coming from somebody who just inaccurately described how this industry works.

 

[Jd Smith1]

Relevant to the discussion: TwoMorrows publishing filed a legal objection.

TwoMorrows Legally Objects To Diamond Bankruptcy Liquidation Of Stock

TwoMorrows legally objects to the planned Diamond Comic Distributors, the debtors, liquidation of publishers' consignment inventory as part of bankruptcy proceedings.

bleedingcool.com

Here's the relevant text:

There will be several, perhaps even many, such motions filed. The odds of their success is not good.

 

[Blue]

That's an unfortunate statement coming from somebody who just inaccurately described how this industry works.

That's how the industry works when you use a freight forwarder. Which is what I was describing, not a distributor. So it shouldn't describe what a distributor does, since that's not what is being talked about.

And I didn't say you couldn't do it, I said that for small businesses doing it you'll find it cheaper. If you're only doing it occasionally like a few times a year, maybe it's worth the time and effort.

 

[nevin]

Looking at that list of Consignment Vendors, there are quite a few small, vulnerable companies there. It's a shame they have get hurt in this by losing product that is sitting on Diamond's shelves. From a lay perspective, it would seem more fair for the court to order Diamond to sell the consigned product and use only their share of the profits to pay creditors. But so it goes.

problem is creditor's the owe the most too get paid first. The small vulnerable companies probably wouldn't see a dime that way either.

 

[Staffan]

problem is creditor's the owe the most too get paid first. The small vulnerable companies probably wouldn't see a dime that way either.

I thought that once prioritized creditors had been paid off, anything left got split proportionally among the remaining creditors? So if they owe me $20k, and they owe you $10k, and there's $6k left I'll be getting $4k and you $2k.