Posted in: Comics | Tagged: Ad Populum, diamond, Sparkle Pop

Diamond Debtors Dispute Sparkle Pop Claims And Cite Bleeding Cool

Diamond Debtors dispute the Ad Populum/Sparkle Pop claims over the consigned inventory, and cite Bleeding Cool in their legal communications

Published Tue, 09 Sep 2025 07:57:04 -0500

by Rich Johnston

Last updated Tue, 09 Sep 2025 08:09:22 -0500

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Three days ago, Bleeding Cool reported on new Diamond Comic Distributors owner Ad Populum/Sparkle Pop's court filings regarding the issue of consigned stock of comics, games and merchandise, owned by the publisher, but held by Diamond, worth many millions, and now the subject of who gains from it as part of Diamond's Chapter 11 bankruptcy process. Heads up, it's not the publishers.

To summarise, Sparkle Pop says that consigned and non-consigned inventory were mixed together at the Olive Branch warehouse and that the Diamond Debtors did not initially inform Sparkle Pop of their interest in it, believed it to have been abandoned by the Debtors as it had not been removed from the sale options on the Diamond website, they sold it as orders came in, and were only told this might be an issue at the beginning of June. But they have segregated the revenue that came in from the consigned stock so far, around a million dollars worth, with half a million in shipping and packaging costs, the latter of which was meant to have been paid by the Debtors.

Now, the Diamond Debtors have filed their own paperwork, contradicting Sparkle Pop/Ad Populum, in which they lead off, saying; "Sparkle Pop would have this Court believe, in essence, that this is all a big misunderstanding – that Sparkle Pop somehow had (or thought it had) rights to sell consigned inventory under the parties' underlying agreement (notwithstanding that it was not sold to Sparkle Pop), that Sparkle Pop was merely trying to do the right thing for all parties by selling consigned inventory and that Sparkle Pop segregated the sale proceeds pending resolution of the various issues pending before the Court regarding consigned inventory. With all due respect, this is all self-serving misdirection."

I love it when legal filings or statements use "respect" in a way that basically means the opposite. Instead, they accuse Sparkle Pop of knowingly selling consigned inventory it did not own, and that Sparkle Pop's actions ignored clear distinctions between owned and consigned goods, on the computer systems that they bought. Saying "that consigned inventory is easily distinguishable from "owned" inventory by the various coding/computer systems transferred by the Debtors to Sparkle Pop as part of the parties' APA. The fact that owned versus consigned inventory can easily be distinguished is clear from the fact that Sparkle Pop has in the past and can now, provide specific information that allegedly discloses what specific consigned inventory sales have taken place. Obviously, Sparkle Pop could not have calculated these amounts without knowledge of what inventory was, or was not, consigned. And if Sparkle Pop did not understand what inventory it was being paid by the Debtors to store was consigned, rather than owned, it merely had to ask one or more of the former employees of the Debtors – many of whom Sparkle Pop hired after the transaction closed."

They also emphasise that the purchase agreement for Diamond explicitly provided for reimbursement of Sparkle Pop's costs only for sales directed by the Diamond Debtors, which these were not, saying that the deal "provided for the reimbursement of Sparkle Pop's cost and expenses in connection with consigned inventory sales when such sales were at the direction of the Debtors."

And emphasising that the company was being paid to store the consigned items at its Olive Branch warehouse, saying "Sparkle Pop does not explain, or disclose to the Court, that the Debtors are paying Sparkle Pop for the storage of consigned inventory at the Olive Branch warehouse. Instead, it criticizes the Debtors for failing to remove such consigned inventory – even though the continued storage of such inventory by Sparkle Pop was expressly contemplated by the parties' written agreements."

They also state their belief that any segregation of the proceeds of consignment sales was a recent "book entry" made just before their motion was filed last month. And cite unanswered emails from the Diamond Debtors' counsel to Sparkle Pop's representatives, with the following quotes.

June 17, 2025 email from Debtors' counsel to Sparkle Pop counsel: "to confirm our discussion last week, the debtors did not sell consigned inventory to Sparkle Pop. Sparkle Pop should not be selling consigned inventory, and certainly should not be retaining the sale proceeds for consigned inventory sales. Please confirm this with your client."
June 18, 2025 email from Debtors' counsel to Sparkle Pop counsel: "to followup my email yesterday, we have received several reports that Sparkle Pop is selling, or is attempting to sell, consigned inventory in bulk. Is this true? As we have discussed, and as you acknowledged in our call last week, Sparkle Pop did not purchase the debtors' consigned inventory. It has no right to sell it, in bulk or otherwise. Please confirm that Sparkle Pop has ceased all sales of consigned inventory. . . . With respect to the consigned inventory that Sparkle Pop has sold, demand is hereby made for an accounting, as well as the immediate turn-over of all sale proceeds."
June 25, 2025 email from Debtors' counsel to Sparkle Pop counsel: ". . .Regarding consigned goods – they should not have been included on the websit and should be removed promptly. Also, Sparkle Pop must account for and forward to the debtors the proceeds of consigned goods sold post-closing on our APA. We would ask your client to wire these proceeds to the debtors by June 30th. Separately, please be aware that the debtors will be filing a motion seeking approval of procedures for the debtors' sale or other disposition of consigned goods. We anticipate that this motion will be set for hearing on July 16th. . . . I will be back to you shortly with our availability for a call. . . ."
July 3, 2025 email from Debtors' counsel to Sparkle Pop counsel: "We are writing as a follow up to our all-hands (clients and counsel) meeting of last Friday regarding, among other issues, Ad Populum's inquiry regarding the Debtor's consignment inventory. As a starting point, and as we advised you and your client during our discussions, and as you acknowledged in our meeting, Ad Populum/Sparkle Pop did not purchase consignment inventory pursuant to its asset purchase agreement with Diamond Comic Distributors, Inc., or otherwise. Notwithstanding that, it has come to the Debtor's attention that Ad Populum/Sparkle Pop has sold some of the Debtor's consignment inventory and has not turned over the sale proceeds of such sales to the Debtor. By this email, the Debtor renews its request for a detailed accounting of all consignment inventory sold by Ad Populum/Sparkle Pop and for the immediate payment to the Debtor of all proceeds received by Ad Populum/Sparkle Pop from such sales."
July 14, 2025 email from Debtors' counsel to Sparkle Pop counsel: ". . . attached is a list that shows the sales of consignment inventory by Sparkle Pop from May 16, 2025 through July 8, 2025. As detailed in the list, the total amount of sales in this period was $1,353,364.00. As you and your client have acknowledged, consigned inventory was not sold to Sparkle Pop as part of our transaction. The Debtors accordingly demand that Sparkle Pop turn over such amount to the Debtors immediately. . . . Please note that the attachment reflects information only through July 8th. The Debtors reserve all rights with respect to consigned inventory sold after such date. . . . If you need wire instructions, or any other information regarding this matter, please let us know. Otherwise, we look forward to receiving the above cited amount (i.e., $1,353,364.00) from your client."
July 24, 2025 email from Debtors' counsel to Sparkle Pop counsel: ". . . Sparkle Pop has not responded to my email of July 14th, in which I requested, on behalf of the Debtors, that Sparkle Pop immediately pay over to the Debtors the proceeds (totaling $1,353,364) of Sparkle Pop's unauthorized sale of consigned inventory in the period from May 16 – July 8, 2025. As you and your client have acknowledged, consigned inventory was not sold to Sparkle Pop as part of our transaction and Sparkle Pop has no right to sell consigned inventory or retain these funds. Since my July 14th email, the Debtors have discovered that Sparkle Pop has continued to sell consigned inventory. Again, Sparkle Pop has no right to do this; it should cease all consignment sales immediately. Per the attached spreadsheet, it appears that Sparkle Pop sold an additional $31,258.60 of consigned inventory in the period from July 9 – July 18, 2025. There is no basis for Sparkle Pop to retain any of these funds. We reiterate our demand that Sparkle Pop pay these funds to the Debtors immediately. The total amount now due is $1,384,622.60."
August 4, 2025 email from Debtors' counsel to Sparkle Pop counsel: ". . . I have not received any response from you regarding my multiple requests that Sparkle Pop (i) cease selling consigned inventory and (ii) immediately pay over to the debtors the proceeds of all consignment sales from May 16th onward. I hope your client understands that these issues will not go away."
August 13, 2025 email from Debtors' counsel to Sparkle Pop counsel: "The Debtors have sent several emails to and spoken with one of your partners and with your client regarding Sparkle Pop's unauthorized sale of consignment inventory, which, as your client is aware, was not sold to it by the Debtors. The Debtors have demanded in writing on several occasions that Sparkle Pop cease the unauthorized sale of consignment inventory and that Sparkle Pop remit to the Debtors the proceeds of such unauthorized sales. Such demands have been ignored for the most part. I have attached to this email the most recent correspondence on this issue. By this email, the Debtors renew their demand that Sparkle Pop immediately cease the unauthorized sale of consignment inventory and immediately remit to the Debtors all proceeds from such sales. The Debtors reserve all rights regarding this issue."
August 18, 2025 email from Debtors' counsel to Sparkle Pop counsel: " . . . In furtherance of our discussions, please be aware that Sparkle Pop's unauthorized sale of consignment inventory and its unauthorized retention of the sale proceeds from such sales was, again, an issue that was brought to the bankruptcy court's attention today by certain consignment vendors. By this email, the Debtors again demand that any such unauthorized sales of consignment inventory by Sparkle Pop cease immediately and that the proceeds of such unauthorized sales be remitted immediately to the Debtors. Please confirm that such unauthorized sales of consignment inventory by Sparkle Pop has ceased (and when) or will cease currently. The Debtors have tried on several occasions to work through this issue on a consensual basis and hereby reserve all rights and remedies regarding such unauthorized sales and retention of sale proceeds. Thank you."

The first of the emails also stated that Sparkle Pop were late with their latest $600,000 purchase payment for Diamond, though that was resolved a week later. The Diamond Debtors also noted that Sparkle Pop asked the Debtors on the 25th of June, whether or not consigned inventory should be included on Sparkle Pop's website, but did not respond to the answer it received to the negative on the same day, directing it to remove the consigned inventory from Sparkle Pop's website. Or why for over two months they did not mention the segregating of proceeds from its sale of consigned inventory. The Diamond Debtors state that they "believe that Sparkle Pop's alleged segregation of these amounts, if it occurred at all, is only a book entry, and happened shortly before the Debtors filed the instant motion."

One of the emails referenced above from the Diamond Debtors on the 3rd of July also directly cites and quotes the Bleeding Cool article, Ad Populum Can't Yet Deal Directly with Diamond Consignment Vendors. In which we reported, from our sources, how Ad Populum/Sparkle Pop believed they had been limited to communicating to publishers through the bankruptcy estate and expressed hope for changes soon. The Diamond Debtors stated in e-mail that "the Debtor is troubled that someone from Ad Populum may have miscommunicated regarding the Debtor's consigned inventory. As we noted above and as you and your client are aware, Ad Populum/Sparkle Pop has not purchased consignment inventory pursuant to its APA with the Debtor or otherwise. To the extent Ad Populum is suggesting otherwise or leading others to believe otherwise, the Debtor requests that such incorrect and inaccurate messaging stop immediately."

However it might be worth pointing out that our article doesn't say anything about the consignment inventory, nor any claims of ownership of it, merely that Ad Populum/Sparkle Pop believed they were restrained in their conversations with such publishers. I'm happy that the participants are reading Bleeding Cool coverage, but would hope that they, you know, actually read it. More, much more, to come.