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

Titan Comics Vs Diamond Comic Distributors Over What Happens Next

Titan Comics Vs Diamond Comic Distributors over just what on Earth happens next, with bankruptcy, the US courts and contracts

You might have thought that the Chapter 11 bankruptcy dealings with Diamond Comic Distributors, being acquired by Alliance Entertainment, were all over bar the shouting after the court made its decision. But there are some wrinkles yet to be ironed out. Titan Comics and Titan Books, together as Titan Publishing, made up the main comic book publisher representation on the Unsecured Creditors Committee, which seems to have been principal in the attempt to get the courts to pick the joint bid of Universal Distribution and Ad Populum instead. That failed.

Titan Publishing signed a new distribution deal with Diamond Comic Distributors at the beginning of January 2024. A non-exclusive deal, with some rather favourable measures, it appears to have been designed to stop Titan from going exclusive with Lunar and/or Penguin Random House. It's worth noting that Titan Publishing is a special case, as its owners Nick Landau and Vivian Cheung also own the Forbidden Planet UK chain of comic book stores, one of the biggest in the world. And once upon a time, owners of Titan Distribution, which was sold to Diamond and became Diamond UK, so there is a lot of shared DNA there. Whether the Diamond deal stands with the new owner, Alliance Entertainment, is about to become an issue.

Titan Publishing files paperwork with US courts over Diamond contract in the wake of bankruptcy

New paperwork has been filed with the US Courts by Titan, requesting that Diamond have until the 25th of April to determine if it will assume or reject the Distribution Agreement with Titan. And that if Diamond determines to reject the Distribution Agreement, Titan may reject all orders for new products from Diamond and may terminate the Distribution Agreement. Titan shall also be entitled to reclaim products held by Diamond on consignment.

The paperwork states that Diamond and Titan have continued to do business in the ordinary course since the filing of this bankruptcy case. This is something of note since it was stated that Titan was the first publisher to push pause on the printing of titles at Transcontinental in Canada that would have been picked up by Diamond, when the bankruptcy news was first leaked. But it looked like that relationship was rapidly fixed… albeit it temporarily.

Titan states that Diamond will transfer all its assets to Alliance Entertainment including "certain executory contracts" no later than the 25th of April. However, Titan Publishing states that its Distribution Agreement is not an assigned contract as it is a "non-exclusive agreement, the cure amount is in excess of $413,898.17, and it could be terminated as early as January 1, 2027."

They also state, and this may be the first time such a publisher has put this down in writing, that "as Diamond is selling substantially all its assets, it is apparent that, once the Sale
closes, Diamond will no longer be operating, or able to operate, as a distribution company. Once Diamond ceases to operate as a distributor, Diamond will be unable to fulfill its obligations under the Distribution Agreement." However, Diamond has not told Titan about what's happening with their agreement. And Titan would like some clarity.

On April 26th, Titan would "typically provide Diamond with a list of Products to be released in July 2025" and on 29th of April, Diamond would normally provide Titan "with its orders for Products to be released in June, 2025. After these dates, there are recurrent weekly deadlines for the order process as many comic books are published on a weekly schedule."

They also reminded the court that upon termination of the agreement, Diamond was required to "remove at its own expense all Products held on consignment ('Inventory')" from their distribution centre. And that Titan reached out to Diamond for clarity and confirmation, but received nothing."

Titan Publishing asks the courts to get clarity from Diamond

As a result, Titan is requesting that the court require "Diamond to make a determination on assumption or rejection of the Distribution Agreement by April 25, 2025, with any such assumption
or rejection effective on April 25, 2025." and if  Diamond elects to reject the Distribution Agreement, that Titan be "entitled to refuse to fill any orders from Diamond placed April 25, 2025, or
later, and to exercise its rights upon termination of the Distribution Agreement, including the reclamation of unsold Products" and that the agreement be terminated, though Titan may still choose to honour orders already made.

They also state that Diamond, as part of the bankruptcy proceedings should be required to promptly reject the distribution agreement if it is no longer necessary or beneficial to the state, citing precedent and adding  "Due to the Sale to Alliance, Diamond cannot provide the distribution services that it is required to provide under the Distribution Agreement. In addition, the Distribution Agreement includes a constant cycle of pre-orders that make it essential to promptly terminate the Distribution Agreement before Diamond begins soliciting orders from retailers for Products that will not be delivered until June or July, and may not be delivered at all if Diamond is unable to provide the appropriate services." And Titan claims not just injury to them but "also the many retailers" and while Titan  "may be able to refuse to ship goods to Diamond if Diamond fails to pay for them, that will ultimately harm the retailers who will not receive their Products promptly, especially when it comes to Products such as weekly issues of comics, receiving Products even a few days late (much less weeks late) can suppress sales as customers generally expect that new comics will be available on a certain date." And, yes, that would include Forbidden Planet.

They state "requiring Diamond to reject the Distribution Agreement effective April 25th will not harm it once the Sale has been consummated because by that point Diamond will have sold its distribution business" and that "Diamond may subsequently claim that those Products are without value to the estate, as Diamond can no longer distribute the Products, and refuse to pay for
those Products in the ordinary course of business as an administrative expense" and that "if Diamond is allowed to continue to solicit orders from retailers… it is retailers who will ultimately suffer if Diamond is subsequently unable to fill those orders."

Which is the reason Titan Publishing are giving for the courts to pull the band-aid on this one. And are making the 25th of April the deadline day to do so. If not, Titan Publishing are planning to claim an awful lot of expenses. In response to their filing, the courts have stated that Diamond must file their own response by the 24th of April.

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