Posted in: Comics | Tagged: bankruptcy, diamond

Courts Tell Diamond Debtors To Pay Lone Oak Payroll Almost $100,000

Courts tell Diamond Comic Distributors Inc., Chapter 11 Bankrupty Debtors to pay Lone Oak Payroll almost $100,000

Published Sun, 23 Nov 2025 16:08:04 -0600

As the Diamond Comic Distributors Inc.'s Chapter 11 bankruptcy process closes in on its first year, a few companies who have done business with the debtor through the post-petition bankruptcy process have filed for administrative claims. Lone Oak is a payroll and staffing service and one of the firms that kept Diamond's Olive Branch warehouse running during the transition to new ownership. Well, they filed a motion last month, seeking immediate payment of almost a hundred thousand dollars as an administrative expense claim related to staffing services used by the Debtors after entering bankruptcy in January 2025. According to Lone Oak, the staffing services, covering the period through May, just before Diamond's asset sale to Sparkle Pop/Ad Populum, were "actual, necessary costs and expenses of preserving the estate," and therefore entitled to priority and prompt payment. Lone Oak emphasised that the Debtor had routinely paid weekly invoices throughout the post-petition period, and only failed to pay the final week after instructing the staffing firms to split the invoices between Diamond and the asset purchaser – a split that the vendors followed, generating the unpaid $100,000 bill. Despite "multiple requests," Lone Oak told the court, Diamond had not explained the non-payment.

This also comes as a property management/development company, Redco, who leased property to Diamond, also asked the court for administrative expenses in October, stating "Since the Petition Date, and subsequent to the date by which Redco could object to the cure amount set forth in the Debtor's Notice of Possible Assumption and Assignment of Certain Executory Contracts and unexpired Leases, but prior to the date of the assignment of the Lease Agreement by the Debtor to Universal, the Debtor has become indebted to Redco for expenses incurred under the Lease Agreement for which Redco has not been paid as follows," citing a total of $9,098.95. The court ultimately granted an administrative expense claim for $4,549.48 in that matter, "with prejudice to its rights to seek further administrative claims. Redco's allowed administrative expense claim shall be entitled to payment in accordance with any plan of liquidation filed in these cases or a further order directing payment of Redco's allowed administrative expense claim. " Meanwhile, Dynamite has tried to get its claims reclassified as an administrative issue to avoid such liquidation plans.

The Diamond Comic Distributors Inc debtors, separate from the continuing business called Diamond II, which was sold to Ad Populum, filed a limited objection in the Lone Oak Payroll matter, stating that they don't challenge the amount owed or Lone Oak's right to an administrative claim, but rather that immediate payment is inappropriate and could damage the broader creditor pool. Bankruptcy courts, Diamond stressed, have "wide latitude" to delay payment of administrative expenses until the plan is confirmed. The company cited Fourth Circuit precedent, noting that early payment should be ordered only when a claimant demonstrates a specific, demonstrable hardship, and Diamond argues Lone Oak has shown none. "These assertions do not establish a particularised harm or prejudice sufficient to warrant immediate payment," The Debtor also highlights that the estate currently has "limited cash resources", less than three million dollars, all subject to JPMorgan Bank's agreement, and warns that granting Lone Oak immediate payment would encourage "a race to the debtor's assets," undermining the equal-treatment goals of bankruptcy. Diamond asked the court to strike the clause in Lone Oak's proposed order requiring payment within ten days and to clarify that the claim will be paid "in accordance with any plan of liquidation… or a further order" but not before.

But the Bankruptcy court found for Lone Oak Payroll and stated that "Lone Oak is granted an allowed priority administrative expense claim against the Debtor's estates in the amount of $94,894.48 expenses it incurred in performing post-petition services for the Debtor" and that Diamond has to pay it in ten days… and that was three days ago. Bleeding Cool will continue to report on the Diamond bankruptcy as it prepares to enter its second year.