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

Tabletop game companies in danger of losing their stock. Pathfinder/Starfinder won't be in stores in August/September.
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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
 

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I am really afraid of what this is going to do to the sales for the new Starfinder edition. I hope the people interested can get it and it doesn't take a huge hit that makes it seem like less of a success than they're expecting.
 

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No reason to think my experience is any more unusual than yours. You meet a lot of people in this hobby over the course of 48 years.

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. I don't generally ask. I know that a bunch of recent ones worked at a local craft brewery? I recall a security guard? I know a social worker?

I think gamers do all sorts of things. But yeah, I've know a ton of artists, both casual and professional.
 

I think the next decade is going to see a revolution in the creative fields, as AI pushes into art, writing, and music in a very big way.
I agree. And there are significant shifts happening already.

As a parallel to this, when we changed from floppies to CDROM, the CDROM was just treated as a big floppy. But developers were able to do far, far more in terms of what the space enabled. Right now, AI is producing content in art, writing and music, and that will very much directly impact creators. And this is just the start.

Right now there is a sort of grass roots anti-AI lobby in this very tiny market of RPGs and tabletop games. However a lot of successful Kickstarters are happening with AI art. I don't see the anti-AI lobby holding out.

Likewise (and parallel to this), I ran an informal poll on Reddit to see how much people cared if, despite knowing the policies of the CCP (and otherwise opposing them), if it mattered if games were being manufactured there. In a nutshell, many said 'they care,' but all but a very small contingent said it wouldn't matter to them anyway.

So despite efforts made to oppose the use of AI, I just don't see it making a whole lot of difference in terms of sales. This personally disappoints me but anyone treating their business seriously needs to pay attention to 'bad news.'
 

Whether Paizo can eke out enough extra inline direct-to-customer sales to compensate for overall reduced exposure I can't guess, but the difference in margin between direct and distributed sales is considerable.

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.
 

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 you grow your audience.
It also really sucks for customers who live on this side of the Pond when things aren't in distribution, because of transatlantic shipping and stuff.
 

It also really sucks for customers who live on this side of the Pond when things aren't in distribution, because of transatlantic shipping and stuff.
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.
 

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.

That's a relatively new trend for publishers in the market, at least for those based out of the US. Brexit, the explosion in postal rates, and the pandemic-related shipping tangles caused many houses to more carefully consider just how their stock moved. Some places are slower than others in adapting. Not a shock. Things are changing quickly. The bigger publishers were still licensing their games and fiction for local editions in English only 30 or 35 years ago as a way to generate licensing income.
 

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.
That appears to be the exception. As an example, neither Pinnacle nor Onyx Path does that. Heck, even Paizo doesn't do that.
 


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.

Yes, it makes a lot of sense, but it doesn't serve the customer when they are paying full cover price and the shipping costs are terrible as compared with Amazon. The addition of a PDF just doesn't cut it.
 

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