We’re at the tedious drudgery stage of the Diamond Bankruptcy matter until the eagerly awaited October 22nd hearing on the consignment inventory. But a few things are oozing through the system and here’s the latest.
SPARKLE POP WILL NO LONGER SELL CONSIGNMENT INVENTORY
As ordered by the hearing held on September 12th, Sparkle Pop can no longer sell the consignment inventory that they hold, not until its figured out who owns it. On 9/17 Sparkle Pop filed an affidavit promising that they would stop.
What is Sparkle Pop/New Diamond doing with the rest of their inventory and the actual business they bought? I’d be curious to hear any reports.
DYNAMITE GETS DISCOVERY
As outlined by Graphic Policy, Dynamite filed a motion to compel Old Diamond to produce its discovery in Dynamite’s ongoing quest to get Diamond to pay up the $500,000 they say they are owed. In a somewhat amusing outcome, Dynamite asked for a hearing by September 29th, but the judge actually moved it up to September 26th. I think Judge Rice is sick of these shenanigans. Discovery is the paperwork and communications involved in the matter, a hefty pile of paperwork, and Old Diamond had other things to worry about.
It turns out Old Diamond turned in their discovery on September 25th, and while a video hearing was held on the 26th, the final matter will be taken up at the 10/22 hearing. But the court wants everyone to get their act together: “THE PARTIES SHALL FILE A STATUS REPORT NO LATER THAN 10/3/2025.”
OLD DIAMOND FILES OPERATING REPORTS
Old (Zombie) Diamond must still file operating reports, which are mostly the money going out to various lawyers and consultants with a cumulative amount of $7,004,255, according to the latest filing.
Good old Raymond James has also been granted payment for their services in auctioning off Diamond’s assets and handling other financial matters. That comes to $3,772,831.25 as compensation for its Business Combination Transaction Fee, DIP Financing Fee, and Monthly Advisory Fees on a final basis; $66,097.58 for expenses and $47,326.15 for “costs and fees incurred in defending the adversary proceeding captioned Alliance Entertainment, LLC v. Diamond Comic Distributors, Inc.”
THE OLIVE BRANCH LEASE
As I’ve mentioned before, Diamond’s 600,000 sq. ft. state of the art warehouse in Olive Branch was assumed by many to be one of their greatest assets…but it turns out they were only renting it. There have been several filings about it, but mostly pushing forward the date when it would be assigned to New Sparkle Pop Diamond. It turns out that this is because there was some controversy about who would pay what.
Filings about this got lost in the scrum but the first objection was from the landlord, AIREIT, because Old Diamond has failed to pay $451,083.73 in property taxes on the property. With fines the total amount came to $455,594.54, which AiREIT paid and wanted Old Diamond to cover.
It turns out that the matter was further delayed because Sparkle Pop didn’t file the financials that were needed to take over the lease – a background check every renter will be familiar with. According to the filing from April 4th (emphasis mine.)
Counsel for the Landlords has been communicating with in-house counsel for Ad Populum over the last several days requesting the last three years of audited financials or unaudited financials for Ad Populum if they do not have audited financials. While the parties have worked constructively and signed an NDA today, AIREIT did not receive any financial information on Ad Populum until mid-afternoon today. The financial information is limited to one slide which is insufficient. AIREIT has requested the financial back-up for the slide.
AIREIT is entitled to due process with regard to its review and analysis of adequate assurance information. Its leased space is substantial and current monthly base rent alone is $175,000.00. In addition, the real property taxes that AIREIT paid on the leased property that is an obligation of the Debtors was $450,000.00, part of the Cure Objection, and an obligation in addition to base rent.
So now you know how much it costs to rent a giant warehouse. But also, Sparkle Pop continued to drag their feet in negotiating with AIREIT according to other filings.
According to a filing last week, however, all this has been hashed out. Old Diamond will pay $451,083.73 in property taxes, and an additional $84,510.81 – for what isn’t totally clear but possibly more fines.
Again it may be a note of some amusement, but AIREIT has its own terms for the various Diamond Comic Distributors in this filing. Old Diamond is Diamond I and Sparkle Pop is Diamond II. And it’s Diamond II that will now be renting the warehouse:
Upon entry of an order of the Court approving this Stipulation and subject to payment of the cure amounts set forth in paragraph 3 hereof, all of Diamond’s right, title and interest in and to the Amended Lease shall be assigned, transferred and conveyed to Diamond II, and Diamond II accepts said assignment and assumes all of the obligations of Debtor as “Tenant” under the Amended Lease.
So there you go; the drip drip drip of money Old Diamond is paying out to the people running the bankruptcy will leave precious little for creditors to get. which makes the matter of getting their inventory back even more crucial – it’s almost certainly the best outcome that they can expect.
I’m actually curious about what happens if the bankruptcy itself goes bankrupt.
English (US) · 