{IMAGE_2}The bankruptcy trustee in the Chapter 7 bankruptcy of Diamond Comic Distributors has filed notice of intent to appeal the recent decision by the judge in the case rejecting the trustee’s motion to extend the time for the bankrupt estate to assume or reject the consignment contracts originally executed between Diamond Comic Distributors and its suppliers. That decision, a group of consignment publishers argued in a subsequent motion, effectively terminated the consignment agreements and paved the way for return of the inventory to the publishers (see “Creditors Request Inventory”).
This represents a disappointing continuation of the long battle over the nearly $50 million at cost in consignment inventory in Diamond’s warehouse at the time of its bankruptcy filing (see “Diamond Holds Nearly $50 Million”). Diamond had asked the judge to rule that it had the right to seize and sell the inventory. The trustee is now continuing this effort, ensuring continuing litigation, expense, and delays before the matter is resolved. We had hoped that the appointment of the trustee to run the liquidation process upon the conversion of the case to Chapter 7 in December (see “Court Orders Chapter 7”) would mark a smoother path to wrapping up the bankruptcy, but it appears that will not be the case.
Source: ICv2
