Diamond Comics Distributors files for bankruptcy: What's next
What's the story
Diamond Comic Distributors, one of North America's largest distributors of English-language comic books and graphic novels, has filed for Chapter 11 bankruptcy.
The company, owned by Geppi Family Enterprises, has a portfolio that includes Alliance Game Distributors, Diamond Book Distributors, and Diamond UK, among other businesses.
The bankruptcy filing comes after several publishers ended their exclusivity contracts with Diamond to broaden their distribution across North America.
The company was established in 1982.
Chapter 11 bankruptcy
What does Chapter 11 bankruptcy mean?
Per Investopedia, "Chapter 11 is a form of bankruptcy that involves the court-supervised reorganization of a debtor's assets and liabilities."
"It is most commonly used by businesses and is also referred to as a "reorganization" bankruptcy."
The process "allows a company to stay in business and restructure its finances and operations."
Notably, major corporations like General Motors and United Airlines have successfully utilized Chapter 11 to overcome financial challenges.
Restructuring efforts
Diamond's restructuring plan and potential sale
The bankruptcy petition seeks the United States Bankruptcy Court's help for the District of Maryland to restructure Diamond's business.
An affiliate of Universal Distribution has already made a $39 million bid for Alliance Game Distributors, one of Diamond's assets.
In a letter to comic book stores and publishers, Diamond Comic Distributors President Chuck Parker confirmed the company's plan to sell key assets, including its sister companies, to Universal.
Contract terminations
Publishers' departure from Diamond led to bankruptcy
The bankruptcy filing comes after several publishers, including BOOM! Studios, Image, Marvel, DC, IDW, and Dark Horse, ended their exclusivity contracts with Diamond.
These publishers wanted a broader distribution network across North America.
Per Parker's letter, the decision to file for bankruptcy was taken "to stabilize our financial foundation and protect the most vital aspects of our business."
Business continuity
Diamond's commitment to continue operations amid bankruptcy
Despite the bankruptcy filing, Diamond will continue to operate as usual.
The company said it has secured financing to support its operations throughout this process.
"Our plan is to continue fulfilling orders in a complete and timely fashion and we are working hard to minimize any disruptions to your orders," said Parker.
Operational challenges
Diamond's distribution center closure raised concerns
Concerns about Diamond's financial stability emerged after the sudden closure of its Plattsburgh distribution center in early December.
The closure left publishers, store owners, and readers worried due to its central role in Diamond's infrastructure.
Back then, Diamond's Chris Powell acknowledged operational difficulties saying, "This process is not working as it needs to... We must make changes and test them with live data and shipments while trying to minimize the impact on retailers."