Sparkle Pop, LLC, the company Ad Populum formed to acquire the comic and toy-related assets of Diamond Comic Distributors, has filed an objection to the proposed settlement between the bankrupt Diamond estate and 15 of Diamond’s consignment vendors (see “Settlement With Some Diamond Consignment Vendors Proposed”). That settlement provided that in exchange for the vendors’ share of $892,913 being held in escrow for sales made after the sale to Sparkle Pop closed (less $50,000 paid to the some of the vendors), the Diamond estate will relinquish its claim to the consignment inventory.
Sparkle Pop is currently operating the Olive Branch, Mississippi distribution center where the consignment inventory is stored, and is objecting to the payment of the escrow funds to the estate and the release of the inventory without dealing with its claim for $433,270 in processing fees for the consignment inventory it sold and $1 million in rent (accruing at a rate of $125,000 per month) for the storage of the inventory. The complete consignment inventory amounts to some 8.25 million units, or nearly $50 million at cost (see “Diamond Holds $50 Million”), although not all vendors are parties to the proposed settlement.
Sparkle Pop had previously attempted to seize consignment inventory for unpaid rent, but had its motion denied in June, with a provision that it could return to court after 60 days to make the same claim (see “Diamond Bankruptcy Update”).
Sparkle Pop is also objecting to the proposed procedure for removing the inventory from its warehouse (which the settlement envisions could be done either by Sparkle Pop or by third parties), alleging that the involvement of third parties is unworkable given the fact that the warehouse is a working distribution center with floor-to-ceiling pallet racks requiring specialized equipment and trained operators, among other complications.
Sparkle Pop is urging the court to deny the motion, and that the consignment vendors and the Diamond estate involve it in any future agreement in a way that addresses their concerns.
Source: ICv2
