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

Diamond's Reason To Reject Alliance Entertainment Was Down To One Hour

Diamond's reason to reject Alliance Entertainment as their new owner came down to just a one hour delay

Published Sun, 13 Jul 2025 11:27:03 -0500

At the auction of Diamond Comic Distributors as part of Chapter 11 bankruptcy procedures, the winning bidder was Alliance Entertainment or AENT, who paid over $70 million, higher than the next-best joint bidders of Ad Populum/Sparkle Pop and Universal Distributors. But then, after announcing AENT as the winner, Diamond suddenly announced that the back-up bidders had been chosen instead. What happened? A number of sealed transcripts from previous court hearings earlier in the year have now been unsealed, and they make for riveting reading. We've already looked at the details of the auction itself, but what happened next? As it turns out, Diamond's reasons for rejecting AENT were that its nose was briefly out of joint. for all of one hour. In the transcript, Mark Minuti of legal firm Saul Ewing, working for Diamond Comic Distributors, the debtors of the Chapter 11 bankruptcy, stated during an April 2, 2025 hearing, as transcribed;

"There remained a significant disagreement related to whether or not Alliance Entertainment's bid included payment to the Debtors for prepaid inventory."

That's in regard to stuff that Diamond had ordered, hadn't arrived, and hadn't been paid for yet, at the time of the auction. Who was on the hook for it? After all, it had a value estimated at approximately $4.3 million. Alliance Entertainment stated that its bid hadn't included that amount, but the Debtors stated that it had. Minuti told the judge.

"Frankly, we could take today and maybe even all of tomorrow with witnesses and exhibits and debating who was right and who was wrong. But by end of the day, Your Honor, I submit that that debate really is not relevant to today's hearing, or the ultimate hearing on the sale, I should say. Because regardless of whose understanding was correct, the bottom line is that as of yesterday at 4 o'clock the parties were not in agreement, and absent inclusion of the prepaid inventory, the Alliance Entertainment bid was less than the backup bid submitted by Universal and Ad Populum by approximately $2.5 million."

This reflected the private bidding that had occurred post-auction day… more on that to come. But if AENT had been pushed up to bidding $81 million then, the Universal/Ad Populum bid reached $78.5 million. But by being back-up bidders, they got Diamond for less than that. Minuti continued;

"So after consulting with the Committee and JPMorgan Chase, the Debtors informed Alliance Entertainment that they were going to pivot and go forward with the backup bidders… About an hour after informing Alliance that the Debtors were proceeding with the backup bid, we heard from counsel for Alliance that it would change its Asset Purchase Agreement now to include the prepaid inventory, and they followed up with a further markup of the Asset Purchase Agreement that provided as such. But in the Debtor's business judgment, Your Honor, it was and is too little, too late. Again, the Debtors have exercised their business judgment. We are moving forward with Universal and Ad Populum as the highest and otherwise best bid for the assets."

So, for want of an hour, and because AENT was negotiating hard, even though they caved on every point, Diamond Comic Distributors Inc., the debtor entity in this bankruptcy, chose Universal and Ad Populum for less money, and all the aggregation that has come since. It's incredible. And the bankers funding the Chapter 11 bankruptcy case, JPMorgan Chase testified that they backed this plan. Of course they did… more to come from Bleeding Cool on this today.