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Sealed Transcripts Over The Diamond Comics Bankruptcy Auction, Opened

What happened on the day of the Diamond Comic Distributor chapter 11 bankruptcy auction? Sealed documents have now been opened...

Published Sun, 13 Jul 2025 10:27:04 -0500

by Rich Johnston

Last updated Sun, 13 Jul 2025 12:48:28 -0500

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A number of sealed transcripts from previous court hearings earlier in the year regarding the Diamond Comic Distributors Chapter 11 bankruptcy have now been unsealed, and they make for riveting reading for Bleeding Cool. Including just how the bankruptcy auction went down… at least according to the representatives of Diamond Comic Distributors, the debtors of the Chapter 11 bankruptcy. Mark Minuti of legal firm Saul Ewing told the court, during a March 27, 2025, hearing, emphasis ours,

"The Debtor received a total of nine bids by the bid deadline. Of the bids received and in consultation with the Committee and JPMorgan Chase, the Debtors qualified seven of those bids. The bids were not all apples to apples. Some people bid on discrete assets. Other people bid on what I'll call a "whole-company bid." And so our investment banker, Raymond James, had divided the bids essentially into lots. Lot A was the Collectible Grading Authority division. Lot B was the Diamond Comic Distributors division, the Diamond Select Toys and Collectibles division, and the Collectible Grading Authority division. Lot C was just the Alliance Game Distributors division. Again, that was what our stalking horse bidder had been on. And then finally, Lot D was essentially all of those divisions that I previously mentioned. Consistent with the Bid Procedures Order, all bids needed some work to get them qualified. But on March 25, the Debtors notified the bidders which bids tentatively would be qualified and what bids tentatively would serve as the baseline bids for each of the lots. We then worked over the next couple of days to get those bids to the point where they were qualified. And we provided final notice on March 23 to the bidders as to which bids were qualified and which served as the baseline bid for the auction. Raymond James, the Debtors' Court-approved investment banker, conducted the auction of the Debtors' assets on March 24 at their offices in New York."

The auction was meant to last a day but instead stretched late. Why? Turns out they didn't start bidding till gone 7 pm. No wonder they had to send out for pizza. Saul Ewing continued;

"While the auction was scheduled to begin at 10:00 a.m., most of that day was spent speaking to the bidders, clarifying the bids, and facilitating a joint bid from two bidders for the whole company Lot D assets. Those efforts were ultimately successful. And when we started the auction, we actually had three separate bidders that were bidding on the assets, what I'll call the whole company asset bidder, or the Lot D. The auction itself, the actual rounds of bidding, I would say began approximately at 7:00 p.m. I should point out I was at the auction. There were frequent breaks during the auction. The Debtors consulted with the Committee and JPMorgan Chase throughout the process, and I want to thank both for their input and their collaborative approach. And while I'm giving out thank you, Your Honor, I do want to thank everyone who attended the auction to make it a success and the great staff and team at Raymond James. After eight rounds of bidding on Lot D, Alliance Entertainment, LLC, was declared the high bidder for Lot D with a bid of $72,245,000. The second highest bid was the combined bid of Universal Distribution, LLC, our stalking horse bidder, and a company called Ad Populum, LLC, at $69,130,000. Once the bidding for Lot D was concluded, Raymond James then turned to auction the other asset lots. There were no additional bids received for Lots B or Lot C alone. There was an auction held for Lot A. That is the Collectible Grading Authority assets. There were four rounds of bidding. But at the end of the day, when we looked at the value for the individual bids for the lots and compared it to the bidding on the whole on Lot D for everything, it was clear, Your Honor, that the Lot D bid was the highest and best bid for the Debtors' assets. And the backup bid, again, was higher and better than any individual bid stacked together and put together." So at the end of the auction, Your Honor, Alliance Entertainment was declared the winning bidder. Universal and Ad Populum were designated the backup bidder. The auction concluded shortly after 12:00 o'clock midnight on Tuesday."

The Witching Hour… appropriate, given that was basically just before everything went pear-shaped. Saul Ewing continued;

"It's very good news from the Debtors' perspective. I can tell the Court that both the bid and the backup bid are going to be sufficient, we believe, to pay off JPMorgan Chase and leave behind funds here for the Estates. So, you know, going from a bid of 39 million to 72 was not easy, but I'm pleased that we got there. And again, I'm pleased that everybody hung in at the auction because it was a very long day."

Dennis Shaffer representing the Official Committee of Unsecured Creditors, basically every comics publisher and toy manufacturer, said that they "did file a limited objection and reservation of rights that those issues are still out there. We are hopeful that once we get the final Form of Revised Sale Order and the APA gets cleaned up that we will be able to hopefully work — towards resolution of those issues."

Jonathan Grasso, on behalf of Alliance Entertainment said "I'll largely just echo the statements of Debtors' counsel. We have been in contact with the objectors and are working to diligently resolve those, and we'll hopefully have an update on that position by the time of the hearing next week. We are diligently working towards addressing the remaining issues with respect to the APA. And the statement was accurate that we would like to deal with any remaining adequate assurance issues at the hearing next week."

And JPMorgan Chase, the bank funding the Chapter 11 bankruptcy, stated, " Good morning. Your Honor, just on behalf of JPMorgan Chase, I just briefly wanted to state that we are extremely pleased with the result of the auction. We believe it is a great result for all."

Everyone was so happy. Everyone was looking forward, holding hands, singing songs and skipping down the Yellow Bankruptcy Road. They had seen a way out, seemingly, in which most people (after the lawyers and banks of course) would get paid some money and Diamond's business would continue.

A short time later, the whole edifice would begin to collapse, according to court transcripts. More on that in an hour…