Six months after Diamond Comic Distributors’ January 15 bankruptcy filing, the inventory of 128 publishers is still in limbo, pending a court decision on whether Diamond will be allowed to liquidate the comics, graphic novels, and other merchandise in its warehouse. Some of the product was being held on consignment per now-defunct distribution agreements. The affected publishers are mainly small presses, and some have as much as $1 million worth of shipments tied up in the dispute.
Diamond initially filed the motion to sell off its inventory on June 25, with the deadline for objections set for July 16 prior to a July 17 hearing. The deadline has since been pushed to July 18. So far, four publishers—TwoMorrows, Magma Comix, Graphitti Designs, and Abstract Studio—have filed against the motion, according to reporting by Graphic Policy. Additionally, Fantagraphics, Drawn and Quarterly, Dynamite Entertainment, and, most recently, Green Ronin are rallying other publishers to pool together a legal fund for what may become a more prolonged fight, per the Beat’s analysis.
The inventory tug-of-war is just the latest development in the “battle royale” that has followed Diamond’s March 24 bankruptcy auction, as Beat editor and PW contributing editor Heidi MacDonald described it in an article for PW. In one of several spinoff cases, Ad Populum—which ended up acquiring Diamond alongside Universal—sued Alliance Entertainment for leveraging the bankruptcy to steal “trade secrets” from Diamond. Alliance initially bid on Diamond, but alleged fraud and called off the deal before it was finalized.
While the acquisition of Diamond may now be mostly settled, the debacle is far from over for its client publishers. Diamond’s attempt to liquidate its inventory to pay off its debts was described by Fantagraphics as an “act of piracy,” and puts even publishers who had longstanding, exclusive agreements with the distributor in jeopardy. Per reporting by Graphic Policy, CEO and publisher of Massive Books Michael Calero said that the up-and-coming indie press has more than $325,000 of product with Diamond, in a low-end estimate. Dynamite, one of the presses crowdfunding for legal fees, had most of its inventory stored with Diamond; the press filed a motion earlier this month to expedite the hearing process, stating that they weren’t going to be able to make payroll.
Publishers who did not have large amounts of their inventory stored with Diamond, or who wrote it off as soon as Diamond announced its bankruptcy, are in a better position. In a statement to PW on behalf of Mad Cave Studios, VP of marketing Allison Pond said the press “made strategic decisions early on to limit our exposure to situations like this.” She added that Mad Cave’s “focus has been on adapting quickly” amid industry uncertainty.
Mad Cave has joined the long list of publishers, including Penguin Random House, who have chosen to hedge their bets with more stable distributors. Simon & Schuster has become a top choice for several presses, including Mad Cave, Pond said.
According to MacDonald, the unluckier publishers’ legal odds are unclear. A Fourth Circuit precedent seemingly establishes publishers’ rights to the consigned products, but the ruling was passed in Virginia as opposed to Diamond’s Maryland docket. Answers will come when the hearing adjourns late next week, coinciding with the first days of San Diego Comic-Con.
