Alliance Entertainment Sues Diamond Over Auction Reversal

The world of comic book distribution is in turmoil as Alliance Entertainment has filed a lawsuit against Diamond Comic Distributors and related entities, challenging Diamond’s decision to sell its assets to a different bidder after Alliance was declared the auction winner.

Here’s the dramatic breakdown:

The Auction and the Flip-Flop:

• Diamond Comic Distributors, currently undergoing bankruptcy proceedings, held an auction to sell its assets.
• Alliance Entertainment emerged as the winning bidder.
• However, Diamond subsequently filed a motion to approve the sale to a joint bid from Universal Distribution, LLC, and Ad Populum, LLC (the parent company of NECA and WizKids), the original “stalking horse” bidder.
• Diamond claims that, after further review and consultation with financial advisors and creditors, the Universal/Ad Populum bid was deemed superior. This bid uses formulas based on Diamond’s financials to define the price, rather than a fixed number.

Alliance Strikes Back:

• Alliance Entertainment has filed a lawsuit seeking a preliminary injunction and temporary restraining order to prevent Diamond from selling to anyone else.
• They are demanding that the court compel Diamond to finalize the sale to them, as the original winning bidder.
• The lawsuit accuses Diamond of “inexplicable refusal” to honor the auction results and alleges that Diamond favored the Universal/Ad Populum bid throughout the process.
• Alliance argues that they had negotiated the Asset Purchase Agreement in good faith, and that the final agreed upon price was $85,368,053, which is $14.4 million more than the price at the conclusion of the auction.
• Alliance also alleges that Diamond negotiated in secret with Universal/Ad Populum, and never engaged in good faith negotiations with Alliance.
• Alliance has requested an expedited hearing.

Key Points of Contention:

• The core dispute centers on Diamond’s reversal of its initial decision regarding the winning bid.
• Alliance claims they followed all procedures and negotiated in good faith, reaching an agreement with Diamond.
• Diamond asserts that the Universal/Ad Populum bid, with its dynamic pricing formula, is ultimately more advantageous.
• The difference between the final agreed upon price with Alliance, and the original price from the auction, is a large point of contention.

What’s Next?

• A hearing on the motions is scheduled for Monday (Today as of this posting)
• The outcome of this legal battle will have significant implications for the future of comic book distribution.
• The comic book industry is watching closely as this drama unfolds.

This situation introduces a high degree of uncertainty into the comic distribution landscape, and raises many questions about the bankruptcy process itself. As more information becomes available, this story will continue to develop.