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What JPMorgan Chase Knew About Diamond Comics And When They Knew It

What JPMorgan Chase knew about Diamond Comic Distributors in the Chapter 11 bankruptcy case... and when they knew it

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JPMorgan Chase, the financial body that has been backing the Chapter 11 bankruptcy proceedings for Diamond Comic Distributors, along with the Consignment Group of comic book publishers, has filed what appeared to be a fairly nondescript filing ahead of the current hearings in bankruptcy court. As it concerns the status of the consigned stock of comic books, toys, games and merch owned by publishers and held by Diamond Comic Distributors, Inc, the debtors in this case, with plans to liquidate the lot to benefit the banks. Namely, JPMorgan Chase.

"In filings, JPMorgan Chase "stipulates and agrees that it was aware of the fact that the Diamond Comic Distributors, Inc., debtor ("Distributor") dealt in consigned goods; and that it had actual knowledge of the Distributor's participation in consignment transactions during the period from its initial advance of funds to the Debtors through the present."

Because previously, in bankruptcy hearings, Adam Fletcher, legal representative of Image Comics, had stated;

"I agree, I think, with a comment that was made by counsel for the Ad Hoc Committee, I believe. I'm not convinced that JPMorgan, they profess that they did not know anything about this consignment relationship. That seems hard to believe…. And we believe that JPMorgan was absolutely aware of these consignment relationships.  They're a sophisticated party.  We believe discovery from them and from the Debtors will bear out that they had to have known about this and that therefore they could have never gotten a senior secured lien in consigned inventory prior to the petition date, and they shouldn't be allowed to get one through the vehicles of the DIP either."

Well, JPMorgan Chase has now agreed that it did know. Why is that relevant? The argument is that the banks should not benefit from Diamond's liquidation of stock because they could not have collateralized the inventory if they knew it was consignment inventory. And they have just admitted they knew, on the legal record. Of course, now that Image Comics has settled with Diamond, Adam Fletcher won't be pursuing that line of inquiry any further, but this may be an important point for the Ad Hoc Committee and the Consignment Group, among others, to pursue.

The Consignment Group is made up of Dark Horse Comics, Dynamite Entertainment, Aspen, Black Mask, Dstlry, Heavy Metal, Magnetic, Massive, Oni, Panini UK, Alien Books, Graphic Mundi, Titan and Vault. Another group, the Ad Hoc Committee, is made up of Ablaze, American Mythology Productions, Avatar Press, Battle Quest Comics, Action Lab, Drawn & Quarterly, Fantagraphics, Green Ronin, Hermes Press, Living the Line, Paizo, Udon and Zenescope.

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Rich JohnstonAbout Rich Johnston

Founder of Bleeding Cool. The longest-serving digital news reporter in the world, since 1992. Author of The Flying Friar, Holed Up, The Avengefuls, Doctor Who: Room With A Deja Vu, The Many Murders Of Miss Cranbourne, Chase Variant. Lives in South-West London, works from The Union Club on Greek Street, shops at Gosh, Piranha and FP. Father of two daughters. Political cartoonist.
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