The Ad Hoc Committee of Consigners Renews their Request to the Court to Release their Stock. Sparkle Pop Accused of Still Selling Stock in Violation of Court Order.

One of the major outstanding issues with Diamond‘s bankruptcy is the status of consignment inventory. Diamond currently has stock that was provided to it by publishers on a consignment basis. That stock is currently physically held by Sparkle Pop which purchased some of Diamond’s assets, including taking over the warehouse where these are stored, though they don’t have a right to sell it (which they did and there was drama around that). We reported that a group of publishers filed a motion to dismiss their cases and thus take control of their goods. But, there’s still a few more publishers that are outstanding and since that motion hasn’t been decided, things are still in motion.

Now, the Ad Hoc Committee of Consigners have filed a motion renewing their request for the release of the stock. Like the Consignment Group, a different group of publisher, the Ad Hoc Committee emphasizes that (old) Diamond has “rejected” their contracts that guided the relationship between Diamond and publishers while (old) Diamond was distributing.

That “rejection” of the contract triggers a bunch of next steps as to how to handle product that Diamond possesses but was provided by publishers.

The motion goes further into highlighting:

• Sparkle Pop sold stock that was on consignment when it wasn’t supposed to. That stock sale has not been paid out to publishers, violating the contract.
• Diamond by allowing the stock to be sold was a failure to safely secure the stock, another violation of the contract.

Those two points alone make the contract terminated.

Now that the contract is rejected/terminated/void, the “consignors,” aka the publishers, can remove their product at their own expense. In other words, the publishers can get their product back but will need to pay to do that, like shipping.

The motion raises other concerns that show Diamond is in breach of their agreements.

• The motion states that Diamond’s insurance coverage has lapsed, a breach of their requirements.
• Diamond has not paid their stock fees to Sparkle Pop, which bought some of Diamond’s assets and currently is holding the physical stock in a warehouse and since that breaches an agreement between Diamond a Sparkle Pop, Diamond is not officially storing the stock and has no means to store it.

But, in what might be the biggest bombshell of the filing, Sparkle Pop is being accused of continuing to fulfill orders containing consigned stock in violation of an order from the court.

From the filing:

One of the Consignor’s, Drawn & Quarterly Books, Inc. (“Drawn & Quarterly”) has a store in Canada. Drawn & Quarterly placed an order in 2025 with Diamond that included the Stock from another Consignor, Fantagraphics Books, Inc (“Fantagraphics”). Recently, on February 26, 2026, Drawn and Quarterly received an email, a true and accurate copy of which is attached hereto as Exhibit B informing them that their order for Fantagraphics’ product had just been shipped.

This is concerning as the Consignors have been given no access to, or oversight of, their Stock since the commencement of this bankruptcy case. The continued fulfillment of orders, without the Consignor’s ability to verify proper control, safeguarding, and accounting of their Stock is extremely prejudicial to their interests and the preservation of its value.

Another Consignor, Living the Line, reports that at least 800 copies of a single title are not accounted for in any prior inventory report provided by Sparkle Pop. Thus, it is imperative that the Consignors regain possession and control of their goods because no party is accountable for missing items that are causing ongoing losses to the Consignors.

The above image shows Drawn & Quarterly ordering One More Year for their shop. That graphic novel was published by Fantagraphics in 2027.

But that opens up the question… what is up with the stock!? The consignors are getting no details regarding it, and haven’t for over a year. That impacts tax obligations and without an accurate account of the inventory, there’s no way to manage their financial obligations. Consignors “do not have an accurate inventory of and continues to depreciate in value.”

The Ad Hoc Committee has asked the court to grant the motion, order the distribution agreements officially terminated, give the consignors 90 days from the effective date of the order to remove the stock, and grant any other relief.

You can read the official court documents below including the evidence concerning Sparkle Pop.

Source: Graphic Policy