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

Diamond Comics Declares "Business As Usual" With New "Partners"

Diamond Comic Distributors declares "business as usual" with their new "partners" in a letter sent to publishers

Yesterday, Bleeding Cool ran the news that pop culture distributor Alliance Entertainment or AENT were cancelling their high eight-figure planned purchase of Diamond Comic Distributors, despite winning the Chapter 11 bankruptcy auction and having the courts confirm their right to purchase when Diamond's debtors stated they preferred a lower bidder, Universal Distribution/Ad Populum. Emily Boticas, Vice President of Publisher Relations and Marketing at Diamond Book Distributors, wrote to publishers to tell them the following, being reported by Bleeding Cool for the first time anywhere.

"You may have heard or read that Alliance Entertainment made the decision not to proceed with its transaction with Diamond."

Read it, we reported it.

"While that may be disappointing to hear"

Mostly to Dennis Barger…

"…be assured that the sale process will proceed with an alternative partner in the very near term. These partners…"

Partners, as in plural. That most likely means the back-up joint bidders, Canadian distributors Universal Distribution and pop culture IP owners Ad Populum, are still in the game rather than the other single big bidder, Basic Fun.

"…these partners have strong balance sheets and, importantly, unmatched presence and experience in our core industries."

Okay that is most definitely a dig at Alliance Entertainment, who were newcomers to comics, even though they did distribute a lot of merch.

"What does this mean for you? As we continue with this process, we will be operating on a business-as-usual basis as we have been doing with the same focus on excellent sales and customer service."

You might need to hurry that along. The termination of the deal by AENT (and more on that later) means that Diamond Comic Distributors appears to be in limbo, their bankruptcy-arranged "DiP" financing period from JP Morgan Chase is over, the thirteen weeks of Chapter 11 protection are up. A lot of publishers, some of which had been paid for continuing distribution under the financing period are still owed a lot of money from before, and a good chunk of that was due next week. Emily concludes…

"On behalf of the Diamond Books family, we want to thank you for your continued patience and support. Your commitment is essential, as we navigate this situation."

And what a situation it has been to navigate. UPDATE: In a press release, Diamond Chief Restructuring Officer Robert Gorin has stated "Diamond Comic Distributors has pivoted to alternative, exceptionally well-known purchasers who are excited to partner with us. These companies have strong balance sheets and, importantly, unmatched presence and experience in our core industries. We are finalizing purchase agreements with these third parties and expect to announce the identities of these purchasers and seek court approval very shortly to complete the sale transactions."  Again with the plural. Here's a brief recap…

• 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 finance 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 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 were 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 the 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.,
• Now AENT has terminated their winning bid and purchase.
• It looks like Universal Distribution and Ad Populum are back in the running…

And here's that letter without all of my interjections.

Dear Publishers,
You may have heard or read that Alliance Entertainment made the decision not to proceed with its transaction with Diamond. While that may be disappointing to hear, be assured that the sale process will proceed with an alternative partner in the very near term. These partners have strong balance sheets and, importantly, unmatched presence and experience in our core industries.
What does this mean for you? As we continue with this process, we will be operating on a business-as-usual basis as we have been doing with the same focus on excellent sales and customer service.
On behalf of the Diamond Books family, we want to thank you for your continued patience and support. Your commitment is essential, as we navigate this situation.
Thanks!
Emily Botica (She/Her)
Vice President, Publisher Relations & Marketing
Diamond Book Distributors

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