Paizo may finally get its inventory back from bankrupt Diamond

Diamond Bankruptcy Estate has reached a settlement with a number of publishers, including Paizo, which clears the way for the publishers to retrieve millions of dollars' worth of inventory. A settlement was reached earlier this week between the major creditors of Diamond Comic Distributors and Sparkle Pop, which now owns the remnants of Diamond. This will allow publishers to finally collect inventory held by Diamond when it declared bankruptcy back in January 2025. Diamond announced plans to sell this inventory (which was held on consignment) to repay various debts, leading to a flurry of legal activity. Numerous publishers, including several RPG publishers like Paizo, have suffered severely as a result, as Diamond was their primary distributor to the bookstore markets.

The settlement solves multiple problems for Paizo. Not only will Paizo finally retrieve their missing inventory, thus allowing them to sell the inventory and recoup some of their lost sales, it also prevents a feared flooding of the market with cheap inventory, which would have been the result had Diamond sold off the inventory themselves for pennies on the dollar. Unfortunately, it's unclear whether the contract disputes between Diamond and Paizo have been resolved. These disputes have prevented Paizo from engaging a new bookstore distributor to get their stock back on shelves, which is doubly disappointing given the growth of RPGs in recent years.

 

[payn]

Nice, I hope this helps Paizo out!

 

[Bravesteel25]

This is great news! Hopefully this means that Paizo can hire back the employees they had to let go recently.

I was worried for a while that this might eventually lead to a dire fate for Paizo. We really need them to stick around so there is some sort of competitive alternative to D&D so that WotC doesn't get too complacent.

 

[Nikosandros]

This is great news! Hopefully this means that Paizo can hire back the employees they had to let go recently.

I was worried for a while that this might eventually lead to a dire fate for Paizo. We really need Paizo to stick around so there is some sort of competitive alternative to D&D so that WotC doesn't get too complacent.

I'm very happy for Paizo, but I don't think they have been on WotC's radar for many years now...

 

[Olaf the Stout]

The fact that this could legally happen in the first place is just mind boggling to me. If you had the products in consignment, surely that means you don’t actually own them.

 

[...m...]

Unfortunately, it's unclear whether the contract disputes between Diamond and Paizo have been resolved. These disputes have prevented Paizo from engaging a new bookstore distributor to get their stock back on shelves, which is doubly disappointing given the growth of RPGs in recent years.

...according to the source article at publisher's weekly, all remaining distribution agreements have been terminated...

 

[Koloth]

The fact that this could legally happen in the first place is just mind boggling to me. If you had the products in consignment, surely that means you don’t actually own them.

For the non US folks, much commerce in the US is covered by the Uniform Commercial Code. "The Uniform Commercial Code is a set of uniformly adopted state laws that regulate U.S. commercial transactions, including financial contracts and other interstate business." Easy to forget that by design the US is really more a collection of 50 smaller countries that gave up some rights in order to join the larger Federal Country. The UCC means that all 50 states mostly have the same rules for commerce.

From earlier posting on the Diamond bankruptcy, apparently the UCC requires that a special form be sent to, in this case Diamond, for each lot consigned that specifies the lot still belongs to the original owner, in this case Paizo. Just guessing but likely this form came into being after a years earlier similar situation was resolved in court. Needing a form for each lot may seem stupid but bureaucrats love extra paper.

Just glad this is resolved and everyone can move on. Hopefully several companies will now have brighter futures.

 

[Marc Radle]

Posted on the Paizo message boards earlier today by CEO Jim Butler:

As this is still active litigation, I can't comment too much on it, but here's the high-level:

1.) The agreement removes the lien/claims by JP Morgan Chase and the Diamond trustee over our products.

2.) Parties have until August 26th to file an objection.

3.) Once the lien is gone, we can move forward with recovery of our products.

4.) Sparkle Pop (NECA/Wizkids) bought the warehouse early on in the bankruptcy and they hold our stock in their Olive Branch, MS warehouse. We can't do anything with the product as long as the lien remains in place.

As we haven't had access to the warehouse for 18 months, we'd like to do an audit of what's actually left and determine what products we want to send back to the Paizo warehouse, send to our new book trade distributor, or destroy.

So, this isn't necessarily the end of the process but hopefully it's the beginning of the end and certainly the end of the beginning.

 

[Eyes of Nine]

I've got gaps in my dead tree Pathfinder 1e adventure path collection. Hoping this results in some of those books coming back to Paizo so I can give THEM my money...

 

[amethal]

The fact that this could legally happen in the first place is just mind boggling to me. If you had the products in consignment, surely that means you don’t actually own them.

It's the bit about Diamond remaining as Paizo's exclusive distributor even in bankruptcy that I find strange.

I'm used to contracts - albeit financial services contracts, not retail ones - including a bankruptcy clause that basically terminates the agreement if one party goes into bankruptcy (or similar). Maybe that's not a thing in the USA?