Green Ronin Crowdfunding Legal Defense Fund In Fight Against Diamond Distrubutors

Green Ronin Publishing has set up a crowdfunding campaign to help cover legal fees fighting to get back their inventory from Diamond Comic Distributors in what it describes as "a dire financial threat to our company, not just today, but well into the future".

Diamond, which filed for Bankruptcy in January, still holds the stock of Green Ronin and over one hundred other companies in its warehouse, and has asked the court for ownership of that inventory so that it can liquidate it and pay its creditors. The distributor, while being mainly comic-book focused, also serves as distributor for some toy and TTRPG companies, including Green Ronin, Paizo, Goodman Games, and Roll For Combat.

The GoFundMe had raised $17K at the time of writing, with over 200 donations.

Paizo Publishing, also affected, 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.

My name is Nicole Lindroos, co-owner of Green Ronin Publishing. Diamond Comic Distributors' recent Chapter 11 bankruptcy has impacted over 100 independent publishers, including Green Ronin, putting us in a very precarious position. Diamond is attempting to use a legal technicality to claim ownership of millions of dollars worth of consigned inventory, which amounts to several hundreds of thousands of dollars for Green Ronin Publishing alone. This is stock that we still own and have not been paid for.

This is a dire financial threat to our company, not just today, but well into the future. We must secure legal representation immediately before the deadline to do so passes.

While there is no "good" time for someone to steal hundreds of thousands of dollars worth of your property to sell for the benefit of their biggest creditors, it is especially challenging given that Gen Con is weeks away. Gen Con is not just a convention for us, it's our most important annual event for connecting with TTRPG enthusiasts, our business partners, and our community, and this year is no exception. We're launching new products and have already committed significant funds to cover everything from booth space, travel (flights, rooms), and most critically, the production of new books and merchandise specifically for the show floor.

Diamond’s bankruptcy and this legal action also mean that Green Ronin has lost its book trade distributor. We are looking for a new partner, but that will take some time. Book trade sales of literary licenses, currently The Fifth Season and The Expanse, are a key part of our strategies for those games. This is especially bad timing for The Fifth Season RPG because we recently received final approvals from N.K. Jemisin and the game is ready to go to print.

We simply don't have the cash on hand to do all of this, pay for an attorney, or participate in any collective legal actions with other publishers in our same position.

The banks are stopping at nothing to wring every last dollar out of Diamond - including taking several hundreds of thousands of dollars worth of Green Ronin product to sell in order to pay Diamond’s debts - but they can't do that, and we've got a legal agreement that says as much. Now, we just need to secure a law firm to represent us in the courts.

The funds raised through this campaign will be used directly to cover the escalating legal fees associated with fighting Diamond's claim in bankruptcy court. This includes attorney retainers, court filing fees, and the costs of pursuing every possible avenue to recover our inventory and protect Green Ronin's assets.

 

[Staffan]

Just a note here - I work in finance at my day job and the notion that a UCC-1 filing would significantly eat into profit margins is simply untrue. In Maryland (where I believe Diamond is located), it costs $75 maximum to file a UCC. Any business lawyer would charge no more than a billable hour to complete the paperwork. Also, anyone can file a UCC filing, so it's not limited by licensure.

I feel for anyone impacted by Diamond's bankruptcy and hope they get their stock back, but trying to say that filing this kind of paperwork was cost prohibitive is very misleading.

Just wondering, is this a one-and-done expense that would be part of establishing an ongoing business relationship, or would you need to file a new one for each shipment you send to the distributor? And is there a particular reason why it wouldn't be covered by the consignment agreement the publishers presumably signed already?

Also, looking at the Investopedia link posted above, I don't see how the UCC-1 is appropriate in this case? I mean, I'm not a lawyer or anything, but the link talks about it being used to secure assets of the debtor for loans the creditor makes, with the examples being a company taking out a loan to buy construction equipment, and the lender filing a UCC-1 on that equipment in order to have dibs on it in case of bankruptcy. It seems to me that this would be important if Diamond had operated a sales-based distribution model, where they buy goods from publishers with some kind of credit terms ("I buy 500 copies of book X and I will pay you so-and-so much money in 90 days"), but my understanding of the consignment model is that it's more "I'll store these books in my warehouse so retailers can buy them via me, and when they do I'll send you X% of what they pay."

But then again, I guess that's what the court case is all about.

 

[billd91]

Good luck to Green Ronin. I tossed in a few bucks to help them out even if I'm not really buying much from them these days.

 

[Christian Hoffer]

Just wondering, is this a one-and-done expense that would be part of establishing an ongoing business relationship, or would you need to file a new one for each shipment you send to the distributor? And is there a particular reason why it wouldn't be covered by the consignment agreement the publishers presumably signed already?

Also, looking at the Investopedia link posted above, I don't see how the UCC-1 is appropriate in this case? I mean, I'm not a lawyer or anything, but the link talks about it being used to secure assets of the debtor for loans the creditor makes, with the examples being a company taking out a loan to buy construction equipment, and the lender filing a UCC-1 on that equipment in order to have dibs on it in case of bankruptcy. It seems to me that this would be important if Diamond had operated a sales-based distribution model, where they buy goods from publishers with some kind of credit terms ("I buy 500 copies of book X and I will pay you so-and-so much money in 90 days"), but my understanding of the consignment model is that it's more "I'll store these books in my warehouse so retailers can buy them via me, and when they do I'll send you X% of what they pay."

But then again, I guess that's what the court case is all about.

I’m not familiar with state law, but it would make the most sense to do it by shipment if you want to maximize your protection. Still, they could have filed a UCC at any point prior to the bankruptcy filing and they would have still been protected.

I’m honestly surprised that consignment goods are considered possessions of Diamond, but I suppose that’s largely dependent on the agreement they signed. If they are considered to be owned by Diamond, though, then the UCC filing that Chase likely filed (likely on all business assets) would mean that Chase can take control of the inventory and liquidate to recoup a portion of their loan.

 

[Jd Smith1]

I’m honestly surprised that consignment goods are considered possessions of Diamond, but I suppose that’s largely dependent on the agreement they signed. If they are considered to be owned by Diamond, though, then the UCC filing that Chase likely filed (likely on all business assets) would mean that Chase can take control of the inventory and liquidate to recoup a portion of their loan.

The definition of the goods is the kicker. Its looking like Diamond's agreements included boilerplate that is making stored goods as assets rather than consignment goods.

As it stands, it appears that Chase/the court will use a portion of Diamonds staff for most effective liquidation of the inventory.

Rooting for the underdog, but not holding out much hope.

 

[dbolack]

I'm definitely rooting against Diamond, but my understanding is that none of the companies really stand a chance. None of the proper paperwork was filed and and there is precedence already for this type of thing. That's what I've been reading anyway.

And there have been arguments that the "proper paperwork" doesn't apply here in just as many. Dunno. That is why you hire licensed SMEs.

 

[dbolack]

I've got some reservations about donating to a for-profit enterprise. When Palladium found itself in dire straits because an employee embezzled possibly more than $1,000,000, the "Crisis of Treachery"™® back in 2006, Kevin Siembieda didn't ask for donations, he asked fans to purchase a limited edition print to help the company out. When I donate, it's to non-profit organizations that exist to provided charitable services.

There are two problems at play here.

The big one - deadline. The date to get responses to this plan is REALLY close. The day before SDCC and then GenCon. There isn't time to set up a bundle/promissory campaign ( We'll finally release X!!!), etc. There just isn't. There's barely time to interview law firms.

The secondary one is access to inventory. A bunch of stuff is at Diamond. But also, a bunch of stuff is mildly inaccessible due to warehouse moves that were also going on when this dropped.

 

[mamba]

How do these gofundmes work, the goal keeps going up whenever it has been reached it seems? At a minimum there was a 9k goal and a 16k one, while now it is 28k. I thought it would be a fixed goal like a KS (maybe without serving as a threshold for funds to be transferred)

Not saying GR is doing something shady here, just genuinely curious

 

[King_$tup1d]

About Diamond

Diamond Comic Distributors was established in 1982 to provide comic book specialty retailers with wholesale, non-returnable comic books and related merchandise.

www.diamondcomics.com

The last line of that statement has me ROLLING. Above all, Diamond aims to treat its customers with one resounding quality: respect.

 

[Rabulias]

Just wondering, is this a one-and-done expense that would be part of establishing an ongoing business relationship, or would you need to file a new one for each shipment you send to the distributor? And is there a particular reason why it wouldn't be covered by the consignment agreement the publishers presumably signed already?

I think I read that the UCC needs to be updated every 5 years.

 

[Christian Hoffer]

I think I read that the UCC needs to be updated every 5 years.

Yes, UCCs are only good for five years.