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

Now Diamond's New Owner Ad Populum Sues Alliance Entertainment (AENT)

Diamond Comic Distributors' new owner Ad Populum/Sparkle Pop is suing Alliance Entertainment (AENT) over trade secrets and staff hiring

Ad Populum, under their subsidiary company Sparkle Pop, the new owners of Diamond Comic Distributors, have launched a lawsuit against Alliance Entertainment or AENT. The suit alleges that AENT stole trade secrets from Diamond and poached employees during Diamond's Chapter 11 bankruptcy case. This comes after AENT made a winning, if challenged and court-confirmed, bid for Diamond, only to then withdraw their offer, leaving Ad Populum and Universal Distribution as joint back-up winners. Then AENT sued Diamond Comic Distributors, alleging fraud over the bankruptcy auction and sale. And subsequently, AENT hired seven senior former employees of Diamond.

Ad Populum/Sparkle Pop accuses Alliance Entertainment/AENT of "brazen disregard of binding non-disclosure and non-solicitation obligations and its theft of valuable trade secrets". That they "abused the bankruptcy process to gain inside access to Diamond Comics employees, trade secrets, and proprietary information, all while delaying the sale of assets to legitimate purchasers." And that "when Sparkle Pop finally closed the sale of Diamond Comics, Alliance pulled the rug out from under both seller and buyer, engaging in a sudden and coordinated raid to poach seven key Diamond Comics sales and marketing employees, effectively hobbling the business. Alliance also exploited its inside knowledge of Diamond Comics' confidential information to usurp key distribution relationships with vendors and customers, further undermining the business."

Diamond, Alliance and NDAs

According to the complaint, Alliance signed a non-disclosure and non-solicitation agreement (NDA) in October 2024 to access Diamond Comics' confidential information, including customer lists, vendor relationships, and financial data, as part of the bidding process. This also reveals that the Diamond Comic Distributors bankruptcy process began a lot earlier than had previously been thought, and something that will be of interest to comics publishers and other suppliers who were providing product to Diamond at that time, without that knowledge, until early January 2025. Ad Populum/Sparkle Pop states "Alliance has violated these strictures openly, effectively daring its counterparties and victims to sue if they want any hope of redress. This lawsuit responds to that challenge."

The lawsuit claims that Alliance, after initially winning the auction in March 2025, refused to close the deal on "spurious grounds" just one day before the scheduled closing date. This allowed Ad Populum/Sparkle Pop and Universal Distribution to step in, closing the deal on the 15th of May. However, Ad Populum/Sparkle Pop alleges that Alliance exploited its access to Diamond Comics' confidential information to orchestrate a "coordinated raid" on the company's workforce and business relationships.

Staff hiring or packing?

The complaint details how, on the 16th of May, Diamond Comics' head of sales, Mike Schimmel, abruptly resigned, followed by six other key sales and purchasing employees a week later. Bleeding Cool identified them as;

• Mike Schimmel, former Vice President of Sales at Diamond Comic Distributors, at Diamond for 21 years, and Capital City Distribution for over three years before that, is now Senior Vice President of Sales at Alliance Entertainment.
• Matthew Demory, who had been at Diamond Comic Distributors for thirteen years, moving from Comics Brand Manager to Print team Assistant Manager, has just announced that he is now Product Manager/Buyer at AENT.
• Joe Lunday, formerly Director of E-commerce Sales at Diamond Comic Distributors, and had been at Diamond since 1998 with a brief 8-month sojourn at Amazon in 2022, is now Director of Collectible Sales at AENT.
• Ryan Shelkett, who had two years as Executive Director of Vendor Development at Diamond Comic Distributors, seven years at Bandai, and another ten years at Diamond as a National Sales Manager before that, is now Vice President of Purchasing at AENT.
• Lee Butman, over twenty-five years at Diamond Comic Distributors, as Merchandise Purchasing Manager, and Toys Brand Manager before that, is now Product Manager/Buyer at AENT.
• Trista Peterson, former National and Outreach Sales Manager at Diamond since 2023, is now AENT's Collectables Sales Director
• Brennan West, former Diamond Purchasing Brand Manager, at Diamond since 2017, is now AENT Product Manager.

These employees, who the suit says had access to critical trade secrets, were allegedly hired by Alliance in violation of the NDA, which prohibited soliciting or hiring Diamond Comic employees until October 2026. Sparkle Pop further claims that Alliance used the confidential information to target Diamond Comics' Amazon distribution channel.  According to the Sparkle Pop complaint, one former Diamond employee, Joe Lunday, reportedly urged Amazon to shift its business to Alliance.

The lawsuit accuses Alliance of violating the federal Defend Trade Secrets Act and the Maryland Uniform Trade Secrets Act, as well as tortiously interfering with employment contracts and the bankruptcy proceedings. Sparkle Pop is seeking compensatory and punitive damages, statutory double damages, attorneys' fees, and injunctive relief to prevent Alliance from employing the allegedly poached workers, using Diamond Comics trade secrets, or soliciting its business partners, including Amazon.

A cease-and-desist letter sent by Diamond Comics' counsel to Alliance on the 2nd of June reportedly went unanswered. Alliance Entertainment, based in Florida, has not yet responded to the lawsuit.

It may also be notable that on the infamous Beyond Wednesdays podcast that AENT CEO Bruce Ogilvie appeared on, he stated that he had to reach out to the Raymond James firm, which was running the bankruptcy, and tried to buy Diamond before entering Chapter 11. The court case states that Raymond James reached out to AENT, and they signed the NDA in October, three months before entering Chapter 11 bankruptcy. It might be worth Bleeding Cool revisiting the timeline for the whole Chapter 11 affair.

You can use these Diamond, AENT, and Ad Populum tags to keep up with the latest on Bleeding Cool. Here's a timeline if you want to catch up…

• On the announcement of Chapter 11 on the 14th of January, Diamond started a 13-week bankruptcy process run by financial firm Raymond James, got financing to operate, and announced an auction for its assets.
• Those assets included Diamond Comic Distribution, Alliance Gaming Distribution, Diamond Select Toys, CGA and Diamond UK
• Universal Distribution was named the Stalking Horse bidder for Alliance Games and Diamond UK, which required a purchase commitment of thirty-nine million dollars, but with certain discounts and privileges for taking that position.
• The auction took place, and it went late. There was food and breakfast billed for.
• And Alliance Entertainment, or AENT, was named the top bidder for the assets of $72,245,000, though not for Diamond UK. This was widely announced, including by Diamond themselves.
• Then we learned that a joint bid by Universal Distribution and Ad Populum came second and was named the back-up bid, with a bid of $69,130,000. With Universal getting Alliance Gaming and Diamond UK, and Ad Populum getting Diamond Comics, Diamond Select Toys and everything else. Basic Fun was third with fifty million.
•  Bruce Ogilvie, AENT chairman, was invited onto a podcast with comic book retailers Dennis Barger and Jesse James after, apparently, watching my performance on the Beyond Wednesdays podcast in which he talked about AENT and Diamond.
• A court hearing with the Honorable Judge Rice in Courtroom 9-D at the United States Bankruptcy Court for the District of Maryland at 10 am was intended to ensure the legality of the bid and the process.
• But instead, over that weekend, the debtors declared that they had chosen the back-up bid from Universal and Ad Populum instead of AENT, despite AENT having bid more. No reason was given.
• AENT filed a lawsuit regarding this decision.
• It took the bankruptcy court to reverse that decision and state that AENT, with the higher bid, had won, though they would have to withdraw their lawsuit.
• AENT has terminated their winning bid and purchase.
• Universal Distribution and Ad Populum were back in the running
• Diamond declared "business as usual" but the courts threatened Chapter 7 over late paperwork.
• AENT sued Diamond, claiming fraud
• Diamond says it's all in hand and went back to court, wanting to be owned by Universal and Ad Populum.
• Sale of Diamond to Universal and Ad Populum was approved by the courts.
• Though Ad Populum paid more than we thought.
• Podcast blamed/credited with the current state of affairs
• Diamond tells Skyrush to stop claiming they won CGA.
• As part of court filings, Diamond released details for every comic store on account.
• We have some finality.
• Ad Populum and Universal Distribution officially acquire Diamond and related assets.
• The layoffs have begun.
• And continue.
• Diamond Select Toys has closed
• Diamond try and reassure retailers over ComicSuite
• Courts withdraw Chapter 7 bankruptcy threat
• We look at the future of Diamond Previews again
• PRH pulls out of Diamond entirely
• Well, not entirely, the UK can stay.
• Hermes Press says Diamond doesn't want to distribute their comics anymore… or anyone's.
• But Diamond pushes back on that, as they publish a new Previews.
• And they assure comic book stores that everything is going to be fine. Honest.
• Then send a letter to publishers which looks like it isn't
• Now they are looking for more money and longer to pay it back.
• Dynamite would like half a million now, please.
• Udon and Manga Classic have now cancelled all Diamond orders.
• Then so did Drem Productions
• And PRH starts to close their special retailer joining offer
• Diamond gets a fourth wave of funding and deadlines.
• Philbo Distribution launches.
• Alliance Entertainment hire seven senior Diamond staffers.
• Universal Distribution rumoured to be hiring Diamond staffers to enter the US market.
• Massive Distribution expands within Lunar
• Diamond has cancelled all their PRH orders.
• There are problems with Ad Populum's first payments to comics publishers

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