Diamond’s Chapter 11 Disagreements Heads to a Bankruptcy Dispute Resolution Program

There’s a lot of matters remaining to be settled when it comes to Diamond’s Chapter 11 process. One of the big ones is the matter of contracts between Diamond and publishers and consigned inventory. Recently, Diamond filed over 30 lawsuits regarding that particular issue, each a specific publisher. In an interesting twist, instead of everything playing out in a costly and protracted legal fight, the various parties have agreed to submit matters to the Court’s Bankruptcy Dispute Resolution Program.

Diamond, the Official Committee of Unsecured Creditors, JPMorgan Chase Bank, the Consignment Group, the Ad Hoc Committee of Consignors, and Sparkle Pop have agreed to submit the following matters:

• Motion Seeking Entry of an Order Requiring the Debtors to Assume or Reject Executory Contracts with Members of Ad Hoc Committee of Consignors; and For Related Relief [D.I. 679] (the “Ad Hoc Committee Motion”);
• Motion Seeking Entry of an Order Requiring the Debtors to Assume or Reject Executory Contracts with Members of the Consignment Group; and For Related Relief [D.I. 747] (collectively with the Ad Hoc Committee Motion, the “Consignors’ Motions”);
• Debtors’ Motion (I) to Enforce the Automatic Stay, (II) To Enforce the Sale Order, and (III) Granting Related Relief [D.I. 784] (“Stay Motion”), to the extent the relief requested was not resolved in the Consent Order Resolving, in Part, Debtors’
• Motion (I) to Enforce the Automatic Stay, (II) to Enforce the Sale Order, and (III) Granting Related Relief [D.I. 878] (the “Consent Order”);
• Any and all claims related to the Consent Order, including, but not limited to claims raised in the Stay Motion and any objections or responses thereto;
• The adversary proceedings commenced by the Debtors against members of The Consignment Group and the Ad Hoc Committee (the “Adversary Proceedings”);
• Any administrative expense claims asserted by members of The Consignment Group or the Ad Hoc Committee;
• Any causes of action under chapter 5 of title 11 of the United States Code against members of The Consignment Group or the Ad Hoc Committee;
• Any and all claims related to the proceeds deposited by Sparkle Pop with the Court Registry pursuant to the Consent Order; and
• Any other related claims or causes of action between the Parties.

The group has requested that Hon. Thomas J. Catliota, a Retired Bankruptcy Judge for the United States Bankruptcy Court for the District of Maryland, serve as the advocate and have it all completed by October 29, 2025.

What’s even further interesting is that Diamond is opening this up to any vendors who are not part of any of the above parties to participate in the mediation process.

The above issues are some of the major ones and would potentially settles issues regarding ownership of inventory which then would allow Diamond to proceed to the next steps such as drafting an actual plan. It should speed up the process overall instead of it dragging out for months, which Diamond nor publishers want over concern Diamond is running out of cash.

October is going to be a spicy month it turns out!