Diamond Comic Distributors, once the main supplier for comic book shops across the United States, is now at the center of a major bankruptcy case. The company has filed a plan to sell off inventory from 128 of its creditors to pay back its debt to Chase Bank. This move was being made by the original Diamond company, not the new owners, Ad Populum, who took over recently. Ad Populum is who we will refer to as the “new Diamond.”
Chase Bank has been supporting Diamond’s daily operations, including paying for consultants and bankruptcy administrators, even as Diamond’s value dropped by $10 million. The loan was originally backed by other companies owned by Steve Geppi, but the amount borrowed has been increased four times.
Recently, the new Diamond stopped sending publishers their inventory. Many publishers had their books stored at Diamond’s warehouses on a consignment basis, meaning Diamond did not own the stock but was responsible for selling it to comic shops. The new plan explains why shipments were paused: the inventory was being held as part of the bankruptcy process.
Diamond claims that 128 companies, including major names like Marvel, DC, and several toy companies, lost their rights to their inventory because they did not file a U.C.C.-1 financing statement before the bankruptcy. According to Diamond’s filing, “None of the vendors that provided consigned inventory to any of the Debtors filed a U.C.C.-1 financing statement against any of the Debtors prior to the Petition Date.” A U.C.C.-1 is a legal form that gives notice that a creditor has an interest in a debtor’s property.
Some companies, such as The Pokémon Group, are not on the list of affected creditors, likely because they objected early in the process. However, this type of technicality is common in bankruptcy cases and may be upheld in court.
Diamond’s official plan states that they want to sell or dispose of the consigned inventory to maximize its value for the estate. The company says the consignors did not meet the legal requirements to protect their interests in the inventory, so Diamond believes it has the right to sell the goods free of any claims from the original owners. The company is seeking court approval to move forward with these sales as quickly and efficiently as possible to generate the best results for the bankruptcy estate.
The list of affected vendors is long and includes many well-known comic book publishers and toy companies. For those who wrote off their inventory and debts to Diamond early on, the current situation may be less of a shock.
Meanwhile, the new Diamond has also changed its payment policies. Publishers are not being paid for books that have already been shipped, and comic shops are being asked to pay upfront for their orders. This has led to confusion and frustration among both publishers and retailers.
Some publishers, such as Fantagraphics and FairSquare Graphics, have publicly stated that Diamond does not own their inventory and that the company is selling books without paying the publishers. Fantagraphics posted a message to retailers saying, “Diamond does not own any Fantagraphics inventory — that inventory is warehoused by Diamond on consignment and its disposition is at our discretion, not Diamond/AdPopulum’s.” They encouraged retailers to order directly from other distributors instead.
Other publishers have reported similar issues, with some describing the situation as “fraud” and saying their books are being held “hostage.” The lack of payments and communication from the new Diamond has led many publishers to stop shipping products to them altogether.
Retailers are also feeling the impact. Some have noted that their orders from Diamond are much smaller than in the past, and that the company’s new minimum order requirements are difficult to meet. The loss of consigned inventory could be devastating for many publishers, especially if they do not receive any of the money owed to them.
Eric Reynolds of Fantagraphics put out a statement he posted on a retailer forum last week, announcing that they too woudl not be shipping to Diamond any more:
A NOTE TO RETAILERS ORDERING FANTAGRAPHICS BOOKS THRU DIAMOND
Effective immediately, Fantagraphics will no longer be distributed through Diamond Comics Distributors. When Diamond declared bankruptcy in January, Fantagraphics and Diamond worked together in good faith to maintain market stability and avoid any further disruption than was necessary.
While all invoices prior to the bankruptcy filing were immediately frozen (and remain unpaid) under Chapter 11 proceedings, Diamond continued to act responsibly and reassured us that business would continue as usual and invoices would be paid on time. Which they were, up until May 16, the day that AdPopulum took over. Since then, the company has gone silent, with no payments for any books sold under the new ownership. Repeated attempts to communicate with Diamond and discuss a payment schedule have been ignored.
At the end of May, we suspended shipping new releases to Diamond until they caught up on their payments. This has not happened. Last week, in response to a routine request to transfer stock, AdPopulum replied:
Please be advised this order will not be fulfilled as our legal team has instructed us to halt all product transfers & NCR requestsl [sic] at this time. We apologize for the inconvenience.
Thanks,
The NCR Team
(We routinely need to restock our Seattle warehouse that fulfills our ecommerce business.)
Diamond does not own any Fantagraphics inventory — that inventory is warehoused by Diamond on consignment and its disposition is at our discretion, not Diamond/AdPopulum’s. Although we have not received a ransom note, AdPopulum is now effectively holding hostage inventory that they do not own, while apparently continuing to sell that inventory and not paying us for those sales. (We have received weekly sales reports for books they do not pay us for!) Please do not order Fantagraphics books and comics through Diamond, even for in-stock inventory, because there is no indication that AdPopulum intends to pay Fantagraphics — and thereby its authors — for those sales.
We encourage all retailers who previously ordered books through Diamond to shift their orders to one of our other distribution partners, including Lunar, W.W. Norton, and Ingram books in the U.S., and Turnaround in the UK. Anyone with any questions about how to best obtain our books is encouraged to email Colin Blanchette at colin@fantagraphics.com.
Problems at Diamond go back several years. The company lost DC Comics as a client during the pandemic after a disagreement over shipping policies, which took away a large portion of Diamond’s business. Some industry insiders believe there were deeper issues in the relationship between Diamond and DC that had been building for years.
The new owners of Diamond, Ad Populum, have a history of buying distressed companies. In a previous case involving the bookstore chain Hastings, Ad Populum’s owner was accused in court of using company funds for unrelated investments, which contributed to the company’s bankruptcy. The case ended in a settlement.
Since Ad Populum took over Diamond, there has been little communication with employees, publishers, or retailers. Former employees have described low morale and a lack of direction. Publishers and retailers are now looking for new partners to distribute their products, and some are considering legal action to recover their inventory or unpaid debts.
As the bankruptcy case moves forward, the future of Diamond and its relationships with publishers and retailers remains uncertain. Many in the industry are waiting to see how the courts will rule on the sale of consigned inventory and whether publishers will be able to recover any of their losses.
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English (US) · 