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

Diamond Comics Challenges Dynamite's Half Million Expenses Claim

Diamond Comic Distributors challenges Dynamite Entertainment's half-a-million expenses claim, in legal filing

In a recent filing in the United States Bankruptcy Court, Diamond Comic Distributors has objected to a motion by comic book publisher Dynamite Entertainment, which sought to define certain moneys owed by Diamond, to wit $509,114.21, as an administrative claim. And thus more easily and quickly payable and granted priority over other claims in the bankruptcy process, as these debts by Diamond to Dynamite were made after bankruptcy protection had been launched.

In the response, Diamond acknowledges that Dynamite delivered goods post-petition and that some payment is owed. However, they dispute the $509,114.21 claim amount, arguing it is overstated and fails to account for setoff rights, which allow a debtor to reduce a creditor's claim by offsetting it against amounts the creditor owes the debtor.

Dynamite's motion also seeks to include attorneys' fees and interest as part of its administrative expense claim, citing precedent. But Diamond argues that precedent does not apply, and that the bankruptcy code allows administrative expense status only for costs that provide a "concrete benefit" to the debtor's estate. The Debtors contend that Dynamite's attorneys' fees and interest do not meet this standard, as they do not directly benefit the estate.

Dynamite also requested immediate payment of its claim and Diamond argues that even if Dynamite is entitled to an administrative expense, immediate payment is not justified. And that courts typically require claimants to demonstrate a specific hardship or necessity to justify immediate payment, rather than simply pointing to the debtor's ability to pay. And that Dynamite has not shown any specific harm or prejudice that would warrant immediate payment. Though I am guessing, from everything that Dynamite has already been through, that won't be hard to prove if asked. And it will be even tougher to deal with given how loyal and supportive Dynamite has been to Diamond through all this.

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
• Ad Populum sues AENT alleging breaches of confidentiality and staff poaching.
• Ad Populum still ghosting publishers.
• Bankruptcy timeline revealed it began in July 2024
• Diamond ends cash on delivery sales
• Hermes Press hires Steve Leaf
• Diamond responds to Dynamite

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