The court in the Diamond Comic Distributors bankruptcy case has approved a proposed settlement with one of the two groups of consignment publishers that have had inventory held hostage at the Diamond (now Ad Populum subsidiary Sparkle Pop) warehouse in Olive Branch, Mississippi for over a year.
The settlement, outlined in a September filing by the bankruptcy trustee (see “Comprehensive Settlement”), provides for the reclaiming of consignment inventory belonging to publishers Aspen Comics, Black Mask Studios, DSTLRY Media, Heavy Metal International, Magnetic Press, Massive Publishing, Oni Press, Panini UK, Alien Books, Graphic Mundi, Titan Publishing, Vault Comics, and Dark Horse Comics.
Unlike the proposed settlement with the other group of consignment publishers, which drew a quick objection from Sparkle Pop (see “Sparkle Pop Objects”), the settlement approved today provides for payments to Sparkle Pop which satisfy its claims for rent and services related to the inventory.
The order provides for actions to be taken to enact the settlement within 10 days, which means that inventory could begin moving fairly soon for those companies, perhaps even reaching retailers for a portion of the holiday season.
While the release of this inventory will be a welcome step, it does not make these publishers whole. Some of the inventory has been devalued by age; the publishers are giving up cash collected from the sale of their inventory by Sparkle Pop; they’ve endured significant legal costs; and the capital they invested in that inventory has been tied up for almost two years.
The publishers in the other proposed settlement, which is still before the court, include the members of the Ad Hoc Consignors Committee, plus BOOM! Entertainment, which has litigated alongside the committee, and Dynamite Entertainment, which was a member of the Consignment Group, the other group of consignment vendors. The Ad Hoc Consigners include Ablaze, LLC, American Mythology Productions, LLC, Avatar Press, Inc., Battle Quest Comics, Action Lab Comics, Drawn & Quarterly Books Inc., Fantagraphics Books, Inc., Green Ronin Publishing, LLC, Hermes Press, Living the Line, LLC, Paizo, Inc., UDON Entertainment, Inc., and Zenescope Entertainment, Inc. Those publishers do not yet have access to their inventory; a hearing on the proposed settlement and the Sparkle Pop objection is scheduled for early November.
It seems likely that the Ad Hoc parties will negotiate an amendment to that settlement bringing in Sparkle Pop under terms similar to those approved today, which would bring an end to this chapter of the Diamond bankruptcy, which involved almost $50 million of inventory at cost (see “Diamond Holds Nearly $50 Million”).
Source: ICv2
