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

Diamond Comic Distributors Wants To DIP Into Their Loan, Again

Diamond Comic Distributors wants to DIP into their loan, again, as we pore through more bankruptcy paperwork

Last week, Diamond Comic Distributors filed a motion in the United States Bankruptcy Court, regarding their access to a special loan they took to keep their business running during their Chapter 11 bankruptcy process. This loan, called a Debtor-in-Possession (DIP) Credit Agreement from JPMorgan Chase Bank, was for a maximum amount of $5.8 million and was initially due to be repaid on the 30th of June. But subsequent amendments brought that back to the 31st of May. Now they want to push it back again, get more money and more time to pay it back.

Diamond's lawyers argue that changing the loan will keep things running smoothly and point to past court cases, like one with the L.A. Dodgers, where judges let businesses decide what's best as long as it helps the company without giving one group too much power.

If the court says yes, Diamond will have more cash and time to try and finish their bankruptcy process, which could mean more money for creditors, but could also leave them in a deeper hole. Diamond is also trying to hurry the decision along, with a hearing on the 30th of May, just three days away. Diamond still has to help the new owners take over through "transition service agreements" and sell off extra inventory or equipment. With the current loan running out on the 31st of May, Diamond says they need the court to act quickly to approve the loan changes.

This also comes at a time when some publishers have been reporting a lack of payments or delayed payments from Diamond in recent days, which should have been under the DIP scheme. Which is why Diamond issued a new letter to publishers today, which tried to set out what's what, but read very much like it was proportioning blame.

You can use these Diamond, Ad Populum, Penguin Random House and bankruptcy 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 and Diamond UK, and Ad Populum getting Diamond Comics, Diamond Select Toys and everything else. Basic Fun was third with fifty million.
• 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

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