Comic Exporters and Holdings Sell Diamond UK to New Distributor, Diamond Distributors UK
Stay updated on the latest developments as agreements await approval from the U.S. Bankruptcy Court. Essential insights for legal and financial professionals.
Diamond Comic Distributors Faces Bankruptcy and Ownership Changes
Agreement Pending Court Approval
Recently, significant developments have emerged in the world of comic book distribution. An agreement has been reached between Comic Exporters and Comic Holdings, subsidiaries of Diamond Comic Distributors Inc., to sell 100% of the shares of Diamond Comic Distributors UK (Diamond UK) to a new company, Diamond Distributors UK Ltd. This new firm will be owned and managed by the existing management team of Diamond UK.
However, this deal is still awaiting approval from the United States Bankruptcy Court, as Diamond is currently involved in Chapter 11 bankruptcy proceedings.
Chapter 11 Bankruptcy: What’s Happening?
Diamond is a major player in the U.S. comic industry, especially as a primary distributor to comic specialty stores in the "direct market." Besides comics, Diamond also produces toys through Diamond Select Toys, featuring popular brands like Godzilla, Mighty Morphin Power Rangers, and Transformers.
Bankruptcy Filing Details
- On January 14, Diamond announced it had filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in Maryland.
- Filing under Chapter 11 allows the company to continue operating while reorganizing its debts, unlike Chapter 7, which involves liquidation.
- A court request on April 28 aimed to shift Diamond from Chapter 11 to Chapter 7, but Diamond agreed to submit the necessary reports.
- The company cited decreased consumer activity, rising costs, and industry decline post-COVID-19 as reasons for its financial struggles.
- Despite the bankruptcy, Diamond continues to operate normally, processing orders as usual.
Background and Recent Developments
Asset Acquisition and Legal Battles
- On May 16, Universal Distribution and Ad Populum acquired Diamond’s assets in a joint deal. Universal took over Alliance Game Distributors’ assets, while Ad Populum acquired Diamond’s comic distribution assets, including Diamond Book Distributors and Diamond Select Toys.
- Earlier, on March 25, Alliance Entertainment announced it had won the bid to buy Diamond’s assets.
- However, just before a court hearing scheduled for April 7, Diamond’s owners attempted to change the sale to a smaller joint bid by Universal and Ad Populum.
- Alliance responded with a lawsuit to block this change, but the court approved the sale to Alliance on April 11. Subsequently, Alliance dropped its lawsuit.
- The sale was initially set to close on April 25, but later, Alliance terminated the agreement on April 24.
Controversies and Lawsuits
- Alliance filed a lawsuit claiming Diamond failed to disclose that its largest vendor, Wizards of the Coast, had not renewed its agreement, which expired on April 30. Diamond had informed Alliance on April 17, but allegedly knew since December 2024.
- Diamond had received a $39 million bid from an affiliate of Universal Distribution, which was considered a stalking horse bid.
- The company is actively seeking other offers for its various units.
Impact on Book Distributors
- On May 21, Penguin Random House Publisher Services announced it would stop offering books through Diamond, with the final order date set for May 26 and the last day of sales on June 25. This move affects major publishers like Marvel, Dark Horse, IDW, BOOM! Studios, and possibly Kodansha USA.
What’s Next?
The future of Diamond Comic Distributors remains uncertain as the court reviews the pending agreement. The ongoing bankruptcy proceedings and asset sales are reshaping the landscape of comic book distribution in the United States.
Source: Press release