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Diamond Comic Distributors Files Chapter 11 Bankruptcy

Diamond Comic Distributors announced on Tuesday that it has declared Chapter 11 bankruptcy. The company filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court in the District of Maryland. Companies who file under Chapter 11 are able to maintain business assets, which may or may not include licenses, in order to attempt to reorganize. Diamond cited that the decreased consumer activity, rising operating costs, and declining sales in the comic book industry post-COVID-19 led to its decision.

Diamond has received a US$39 million stalking horse bid, the initial bid on a bankrupt company's assets, from an affiliate of Universal Distribution for Alliance Game Distributors. Diamond signed a Non-Binding Letter of Intent with the same company to buy Diamond UK. Diamond is also actively pursuing offers and has received interest from buyers for its other business units, which include: Diamond Book Distributors, Collectible Grading Authority, Diamond Select Toys, and its main distribution lines.

The company has received commitments for up to US$41 million in debtor-in-possession financing from JP Morgan Chase. The company will use those funds for post-petition operating expenses and to ensure adequate working capital for its obligations.

Diamond will continue to operate business during this time. Orders will continue to process as usual. The company plans to continue running Free Comic Book Day.

Diamond is one of the primary distributors of print comics in the United States.

Update: Diamond's two largest unsecured creditors are Penguin Random House (a publishing company and distributor for other publishers, including manga ones such as Dark Horse) and Bandai. Diamond owes these two companies US$9,202,181 and US$4,348,743, respectively.

Diamond also owes money to the following companies:

• Simon & Schuster (distributor for Viz and other publishers): US$$600,145
• Hasbro: US$1,064,378
• Bandai Namco Toys & Collectibles (listed separately): US$576,072
• Viz Media: US$421,205.
• Titan Publishing Group Ltd. (Titan Books): $357,417
• Square Enix: US$314.296
• The Pokémon Company International: US$280,375
• Udon Entertainment: $202,694

There are likely more companies with links to Japan — Diamond's recent filed bankruptcy petition only lists the top 30 unsecured creditors. Source: ICv2

Sources: Press release, Toyark (Tony Bacala), Bleeding Cool (Rich Johnston)