In separate filings made in the U.S. Bankruptcy Court for the District of Maryland this week, the future of Diamond Comic Distributors grew murkier and more fraught.  

The first motion was made by Matthew W. Cheney, acting U.S. trustee for region four, who filed a motion on April 28 asking the court to convert Diamond‘s Chapter 11 bankruptcy proceedings to Chapter 7, or to dismiss the case. If the motion to switch to Chapter 7 is granted in the May 27 hearing, the bankruptcy proceedings would move from finding a reorganization plan to keep Diamond alive to closing the company and liquidating Diamond’s assets.

Since Diamond filed for Chapter 11 in January, Cheney’s motion asserts, Diamond has failed to file any monthly operating reports. Cheney noted that, without the mandated reports, it is impossible to understand how the company has performed since the January filing. Diamond can maintain its Chapter 11 status if it begins to filed monthly reports or confirms a reorganization plan is close to be completed. 

A day later, Diamond filed a motion to authorize its sale to its back-up bidders, Universal Distribution and Ad Populum, with a twist: the motion now mentions a third entity, Sparkle Pop LLC, listed as an “affiliate” to Ad Populum. Sparkle Pop was incorporated less than a month ago, on April 4, per the Delaware state department’s division of corporations. 

The proposed structure would see Ad Populum/Sparkle Pop take on the Diamond Comic Distributors division, Collectible Grading Authority, and Diamond Select Toys, with Universal set to acquire Alliance Distribution. Should the judge approve the motion, it would put a stop to the trustee’s request to convert the case into a Chapter 7.

To that point, Diamond sent an email to retailers, per the Beat, on Monday, asserting that the trustee’s request to convert Diamond’s bankruptcy cases “was made due to Diamond’s unfortunate, but unavoidable, delays in filing certain reporting information with the Court.” It added: “Diamond is in the process of finalizing the reporting information and will do so over the next few days. Once this has happened, we fully expect that the United States Trustee will withdraw its request.”

In a separate filing on April 29, it was revealed that Alliance Entertainment (AENT) is suing Diamond for a second time. The suit accuses the comics distributor of “fraudulently misrepresenting” its relationship with Wizards of the Coast (WOTC), a vendor that the suit alleges accounts for 25% of the company’s gaming business revenue. The complaint alleges that Diamond intentionally hid that, at the end of 2024, WOTC told Diamond executives that it did not intend to renew its distribution agreement for 2025.

The complaint further states that WOTC rejected a proposal made by AENT that would pay a fixed sum to WOTC and agree to minimum purchase commitments in exchange for WOTC extending its distribution agreement with Diamond through December 31, 2025. After WOTC refused the offer, AENT terminated its agreement to buy the company—a decision that was disclosed over the weekend.

In its suit, Alliance is seeking damages of $8.5 million, plus accrued interest and further damages.

This story has been updated with further information.