Posted in: Comics, Comics Publishers, Current News, Image | Tagged: Ad Populum, diamond

Image Says Diamond's Goal Is "Stealing" $3,000,000 of Comics From Them

Image Comics says that the goal of the debtors of Diamond Comic Distributors Inc is "stealing" $3,000,000 worth of comics from Image

Published Fri, 18 Jul 2025 13:27:04 -0500

by Rich Johnston

Comments

Image Comics has joined a number of comic book publishers in filing objections against Diamond Comic Distributors, Inc., the debtors in the Diamond Chapter 11 bankruptcy case. They are planning to sell off consigned inventory from hundreds of comic book publishers, as if it was their own. The difference between Image Comics and other publishers is in the language used.

"The filing from Image Comics states that it is the plan is a "brazen attempt by the Debtors to misappropriate Image's inventory, which Diamond Comic Distributors, Inc. holds as Image's agent. For months the Debtors refused to engage in meaningful discussions with Image regarding return of the Image inventory Diamond holds (or even to provide contractually required reporting of Diamond's postpetition sales of that inventory) on the pretext that Image needed to wait and see if the contract between Image and Diamond (the "Agreement") was designated for assumption and assignment as part of the Debtors' asset sale to Sparkle Pop. When Sparkle Pop did not designate the Agreement, without warning (and without even first moving to reject the Agreement), the Debtors filed the Motion seeking to sell Image's inventory in a fire sale auction (most likely to Sparkle Pop for pennies on the dollar) and use the proceeds to pay their creditors (presumably the Debtors' pre-petition secured lender turned DIP lender, JPMorgan Chase, since its loan has yet to be fully repaid."

Sparkle Pop or Ad Populum is the company that successfully bid for and bought Diamond Comic Dustributors in the Chapter 11 bankruptcy auction, but that did not include the stock that Diamond was holding. This is the first public statement of the belief that Diamond Comic Distributors, Inc. will sell that stock to Ad Populum/Sparkle Pop for pennies on the dollar. The filing continues;

"Image believes the imprecision of the Debtors' assertion in the Motion was meant to deliberately obfuscate the fact that a very large portion of Diamond's inventory was held as agent or consignee, even if certain other Debtors may have purchased the majority of their inventory from vendors outright. Image intends to seek discovery from the Debtors under Bankruptcy Rules 7026 through 7037,9 which Image believes will conclusively establish this."

"Deliberately obfuscate" is certainly a synonym for something. But Image are less circumspect with the language to come.

"The Debtors cannot accomplish their goal of stealing and then selling Image's inventory through a motion. Instead, the Debtors must initiate an adversary proceeding before stripping Image of its property rights."

"Goal of stealing" is the most serious allegation in this paperwork so far. But you can see why tempers might be high.

"Until 2023, Diamond was Image's exclusive agent in both certain overseas markets and in the domestic U.S. market. Diamond therefore held a large volume of Image inventory to meet the sales demands of both markets. But in 2023, Image switched to Lunar Distribution as its exclusive agent in the U.S. market. And, in April 2024, Diamond became Image's exclusive agent only in the overseas markets with the execution of the Agreement. Beginning in 2023 through the middle of 2024, Image directed Diamond to transfer possession of much of the Image inventory then held by Diamond to Lunar. Yet Diamond failed to transfer a large portion of that inventory without explanation. Of the total $2,909,486.23 worth of Image inventory left at Diamond today, $1,231,783.92 (~42%) is inventory that Diamond failed to transfer to Lunar's possession per Image's direction. Diamond wrongfully remains in possession of that inventory despite clear prepetition instructions from Image. Thus, that portion of the inventory Diamond now holds was never intended to be governed by the Agreement—no matter what relationship it is deemed to create—and Diamond has no right to sell that portion of the inventory even if it somehow obtains the right to sell inventory supposedly consigned to Diamond under the Agreement."

Diamond is holding $3 million worth of Image Comics stock, which they are planning to liquidate. A good chunk of that was already meant to have been sent to fellow distributor Lunar Distribution. The paperwork includes e-mail chains between Diamond, Image and Lunar that establishes all this… until suddenly it doesn't. And Image Comics repeats their claims.

"the Debtors are not seeking to sell the inventory in the ordinary course of business at the type of retail prices that Image could obtain if it sold this inventory over time (itself or through another distributor like Lunar). Rather, Debtors seek permission for a bulk fire sale (presumably to Sparkle Pop or another vulture firm that will buy it for a fraction of its retail sale value). Image will then be doubly injured by receiving next to nothing on account of the wrongful sale of inventory that it owns (and could sell for far more) and then having to compete for sales in the market against that same inventory when it is resold (possibly at discounted prices) by whomever buys it at the proposed auction sale. Debtors make no case why this inventory (much of which Diamond has held for many years) must be immediately liquidated to the extreme prejudice of Image, rather than waiting until this dispute has been resolved."

The hearing over this has now been delayed until August. But it is likely to be what everyone will be talking about at San Diego Comic-Con.