Diamond Motions the Court to Approve its Settlement Agreement with Image Comics

When it comes to bankruptcy proceedings for a corporation, pretty much everything needs to be approved by the court. Diamond Comic Distributors has submitted a motion to the court approve its settlement agreement with Image Comics concerning the return of its consigned goods.

In January 2025, Diamond commenced its chapter 11 process. In June 2025, Diamond submitted a motion for the “sale or other disposition of consigned inventory.” Even after its sale to Universal Distribution and Ad Populum/Sparkle Pop, Diamond still had a large inventory of consigned goods estimated to be in the value of tens of millions of dollars. Diamond wanted to sell the inventory to help raise money to pay back its loan lender, JPMorgan Chase Bank. Of course publishers weren’t happy about that and a legal fight has been going on since over who owns those consigned goods and if Diamond has the right to sell them.

Publishers objected to the plan, including Image which filed theirs in July. During numerous motions and filings in the legal process, Diamond teased it was trying to come to a resolution with publishers concerning their proposed consignment plan. In August it was announced that Image and Diamond had settled over the matter.

Even while Diamond’s motion is stayed, they are still looking to settle with Image and needs the court’s approval to do so. The filing states the plan as:

• The Debtors will segregate and package for pick up certain consigned inventory that was provided by Image to be returned to Image (the “Return Inventory”). Image will pick up the Return Inventory at its expense during normal business hours at a date and time to be agreed upon by the Debtors, Image and Sparkle Pop.
• The Debtors will retain the consigned inventory provided by Image that is not Return Inventory (the “Remaining Inventory”). Image relinquishes any and all rights to the Remaining Inventory, including any right to the proceeds of the sale of the Remaining Inventory. The Debtors may market and sell the Remaining Inventory at their sole discretion, free and clear of any interest of Image and the Debtors shall retain all proceeds from such sale.
• Image waives all claims and causes of actions against the Debtors, including all claims described in Image’s proof of claim (Claim No. 614) and any claim for an administrative expense against any of the Debtors.

The bullet points are similar to what was announced in August, but from the second bullet point, it sounds like Diamond will retain some inventory afterwards that Image doesn’t want and Diamond would then be able to sell it if it chooses and Image wouldn’t get anything from those sales.

We’ve heard from numerous publishers that a similar plan was floated to them by Diamond, the publishers would buy back their inventory in some way and then pay for shipping the product back to themselves. The deal could be considered a smart one in that publishers could still gain some money back from the sale of the inventory and it keeps it from being sold off cheap and flooding the market. The flipside is confidence publishers will succeed when hearings continue in September to determine who owns the inventory and get their inventory back that way with the cost being how much they paid lawyers.

You can read the full motion below: