The Pokémon Company: Diamond Comic Distributors Owes Over $550,000 USD

Wow! A leading comic distributor has filed for bankruptcy. Behind the headlines lie far-reaching changes and significant claims.

Bankruptcy Filing and Background

Diamond Comic Distributors filed for Chapter 11 bankruptcy on January 14th. The company filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Maryland.

Companies that use this procedure can retain their business assets—which may include licenses—to facilitate reorganization.

Diamond cited declining customer demand, rising operating costs, and declining sales in the comic book industry following COVID-19 as the reasons for the filing.

Reclamation Claims by The Pokémon Company International

The Pokémon Company International (abbreviated as TCPI) has asserted reclamation claims for inventory delivered by Diamond Comic Distributors within 45 days of the bankruptcy filing.

TCPI claims that the company is owed $531,000 (approximately €511,597) for goods sold on credit. In addition, a claim of $280,375 (approximately €270,130) exists against TCPI, one of the unsecured creditors.

Offers, Transactions, and Further Developments

Diamond received a stalking-horse bid of $39 million—that is, the initial bid on the assets of a bankrupt business—from a subsidiary of Universal Distribution for Alliance Game Distributors.

Furthermore, the company signed a non-binding letter of intent with the same company to acquire Diamond UK. Concurrently, it is actively seeking other potential buyers, with offers and interest already received in other business units, such as Diamond Book Distributors, Collectible Grading Authority, Diamond Select Toys, and its main distribution lines.

This has been reported by AnimeNewsNetwork and the source ICv2.

Financing and Ongoing Business Operations

For ongoing operations, the company has secured commitments for up to $41 million in debtor-in-possession financing from JPMorgan Chase.

These funds are intended to cover operating expenses after the bankruptcy filing and to ensure sufficient working capital to meet obligations.

Despite the ongoing restructuring, business operations will continue: orders will be processed as usual, and Free Comic Book Day is still expected to take place.

Creditor Overview and Further Claims

The two largest unsecured creditors include Penguin Random House—a publisher and distribution partner for other publishers, including manga publishers like Dark Horse—and Bandai.

Diamond is in arrears to this company with $9,202,181, more precisely $4,348,743. That's over 9 million euros if the goods are not taken into account.

Other outstanding payments include:• Hasbro: $1,064,378

• Simon & Schuster (distribution partner for Viz and other publishers): $600,145

• Bandai Namco Toys & Collectibles (listed separately): $576,072

• Viz Media: $421,205

• Titan Publishing Group Ltd. (Titan Books): $357,417

• Square Enix: $314,296

• The Pokémon Company International: $280,375

• Udon Entertainment: $202,694

There are likely other companies with Japanese connections—the recently filed bankruptcy petition from Diamond lists only the 30 largest unsecured creditors. Diamond is also one of the leading distributors of printed comics in the USA.

Conclusion

This could get brutal. Plus, bankruptcy is never easy for a company, as employee motivation could decline if salaries are not paid.