Posted in: Comics, Current News | Tagged: AENT, diamond

Courts Declare Alliance Entertainment/AENT Owns Diamond Comics For Now

The Baltimore bankruptcy court declares that Alliance Entertainment/AENT is to be the new owner of Diamond Comic Distributors... for now

Previously in the Diamond Chapter 11 Bankruptcy, the auction of Diamond Comic Distributors' assets saw Alliance Entertainment come out on top, beating out the backup joint bidder Universal Distribution and Ad Populum, as well as a lower bidder, Basic Fun. However, after the auction, and after Alliance Entertainment was declared the winner by Diamond, Diamond did a reverse ferret and declared that the backup bidders, Universal/Ad Populum, had been chosen instead. Alliance Entertainment issued a lawsuit against Diamond, and then earlier this week, the Chapter 11 bankruptcy court also looked at the decision.

The filed paperwork reveals that on the 8th of April, "the Court indicated that it was prepared to enter an order approving the sale of substantially all of the Debtors' assets to Alliance Entertainment, LLC (the "Sale"), upon the Debtors' submission of a final form of order and revised asset purchase agreement consistent with statements made on the record at the Sale Hearing". Basically, the court approved the auction that saw Alliance Entertainment win the lion's share of Diamond Comic Distributors rather than the lower bid preferred by the Debtors.

Why? I understand that the people owed money by Diamond might prefer to receive less if it means that Diamond would be more likely to continue as it did, with a continuity of service, with Universal Entertainment already present in the direct market in Canada and prepared to move into the USA. However, Alliance Entertainment is a different kind of company that revealed a different way of doing business on a certain podcast, including expecting different price points and mark-ups.

It's still not the end, though. The paperwork also states that the Official Committee of Unsecured Creditors, which Bleeding Cool had previously identified as Titan Comics/Forbidden Planet, Little Buddy Toys and Simon & Schuster, had "identified potential Challenges with respect to the Prepetition Lender's liens on and security interests in the Debtors' assets" and the court has allowed a Challenge Period over the bankruptcy decision to be extended to the 25th of April.

Though this is "provided, that any Challenge(s) asserted by the Committee may relate solely to alleged liens, security interests, and other claims and encumbrances with respect to (a) leasehold interests, (b) commercial tort claims, (c) causes of action arising under Chapter 5 of the Bankruptcy Code and similar state or other laws, (d) directors and officers insurance policies, (d) copyrights, (e) foreign intellectual property, and/or (f) any proceeds from the foregoing (a) through (e)". So those are limited terms by which to challenge the decision, and they are basically down to who owns what and who does what.

So, right now, the courts say that Alliance Entertainment bought Diamond at auction, but there are still limited ways this can be challenged. Do we have another Jarndyce vs. Jarndyce on our hands?

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