At the start of the year Distributors files Chapter 11, which meant legal protections were in place while the company tried to find a buyer. Otherwise? It would go out of business, and this is the company that puts TTRPGs, comic books, and merch in game and comic stores across North America.
The good news was that Universal Distribution had put a “stalking horse” bid in to guide the paperwork. The bid acted as a minimum, and if no one else could beat it, Diamond would go to Universal.
A report in ICv2 outlines how Alliance Entertainment did turn up with a bigger bid.
The catch? Diamond still hasn’t sold to Alliance. It’s tried to sell itself back to Universal Distribution and a company called Ad Populum (which owns NECA and WizKids).
Alliance is angry and has requested a preliminary injunction with a temporary restraining order prohibiting Diamond from selling itself.
Last week, Diamond filed a motion seeking court approval to sell its assets to the joint backup-bidder, Universal/Ad Populum. This move came after Diamond declared it had reversed its initial decision, now deeming the backup bid superior to the one it had chosen as the winner on auction day.
The revised backup bid uses formulae based on Diamond’s financials to calculate the final price rather than stating a fixed sum and incorporates changes made since the auction concluded. Diamond indicated this change following consultations with its investment bankers (Raymond James), professionals, the unsecured creditors committee, and its bank.
The initially declared winner, Alliance, filed a lawsuit against Diamond in response. Alliance’s court filings include a negotiated Asset Purchase Agreement reflecting changes made post-auction, which brought their total offer to $85,368,053 – approximately $14.4 million higher than their bid at the auction’s close. Alliance alleges that Diamond favoured the Universal/Ad Populum bid throughout the process and engaged in secret, bad-faith negotiations with them after the auction while failing to negotiate genuinely with Alliance. Providing a detailed timeline, Alliance argues it accepted all post-auction changes requested by Diamond and remains prepared to close the deal at the increased price.
Currently, the situation involves competing legal actions: Diamond seeks approval for its agreement with Universal/Ad Populum, while Alliance is suing to enforce its agreement. A court hearing on these motions is scheduled for Monday.
