Diamond Files for Chapter 11 Bankruptcy

Diamond Comic Distributors has officially declared Chapter 11 bankruptcy, filing a voluntary petition on January 14 in the United States Bankruptcy Court for the District of Maryland. This move allows the company to maintain its business assets while attempting to reorganize amid challenging market conditions.

Financial Obligations

As part of its bankruptcy proceedings, Diamond owes $280,375 to TCPI, one of its unsecured creditors. The company’s financial struggles have been attributed to:

Decreased consumer activity
Rising operating costs
Declining sales in the comic book industry post-COVID-19

Major Creditors

Diamond's two largest unsecured creditors include:

Penguin Random House: $9,202,181
Bandai: $4,348,743

Additionally, the bankruptcy petition lists the top 30 unsecured creditors, indicating that there may be more companies, particularly those linked to Japan, involved in this situation.

Stalking Horse Bid and Future Plans

In a positive development, Diamond has received a $39 million stalking horse bid from an affiliate of Universal Distribution for Alliance Game Distributors. This initial bid is crucial as it sets the baseline for potential asset sales. Furthermore, Diamond has signed a Non-Binding Letter of Intent with the same company to sell Diamond UK.

The company is actively seeking offers for its other business units, which include:

Diamond Book Distributors
Collectible Grading Authority
Diamond Select Toys
Main distribution lines

Financial Support

To support its operations during this transition, Diamond has secured commitments for up to $41 million in debtor-in-possession financing from JP Morgan Chase. These funds will be utilized for:

Post-petition operating expenses
Ensuring adequate working capital for obligations

Business Continuity

Despite the bankruptcy filing, Diamond will continue its operations. Orders will be processed as usual, and the company plans to maintain its annual Free Comic Book Day event.

Diamond remains one of the primary distributors of print comics in the United States, and its efforts to reorganize may pave the way for a more stable future.