Where there’s smoke, there’s fire? There’s a lot of filing concerning payments to lawyers, financial consultants, and more when it comes to Diamond‘s chapter 11 process. Millions of dollars have been paid out. There’s also attempts from creditors, such as those leasing property, to get the money they’re owed. While there hasn’t been issues for most of the process, in the past month, objections have been filed by different parties. The reason provided is concerns over Diamond’s solvency and if they’ll be able to pay back publishers that are creditors in any amount.
Now, Diamond has filed a limited objection due to their concern over their cash flow.
Ara, Inc./Loan Oak Payroll filed a motion to be immediately paid the $94,894.48 they’re owed for administrative expenses.
While Diamond doesn’t object to the money owed, they are objecting that it should be paid immediately. Diamond states that they have less than $3 million in total sources of cash. Below is from their response with the bold part added:
Although the Debtors believe they have substantial sources of recovery to pay administrative and other creditors, the Debtors’ estates currently have limited cash resources. See Order Approving Seventh Stipulation Between Debtors and JPMorgan Chase Bank, N.A., Amending DIP Credit Agreement [D.I. 982], Exh. 1 (budget through November 15, 2025, reflecting less than $3,000,000 in total sources of cash, all of which are subject to DIP Agent’s liens). Compelling immediate payment of ARA’s claim would only encourage a race to the courthouse to the detriment of other creditors; and therefore, this request should be denied.
It’s a stunning objection that shows Diamond is in dire straits, and it’ll be interesting what money they’ll have at the end, if any, to pay back its creditors.
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Source: Graphic Policy
