Top US comic brand liquidating after Chapter 7 bankruptcy

In a comic book, when things look bleakest, that's usually when a hero emerges to save the day.

In real life, however, that does not always happen. Sometimes, despite the best efforts of everyone involved, no hero emerges, and the day doesn't get saved.

When a company files for Chapter 11 bankruptcy protection, it risks losing control of its business.

"A fundamental tenet of Chapter 11 is that current management continues to operate the company as the debtor in possession," wrote Lee Jason Goldberg for Weil Restructuring.

He explained how a company could lose control of its business.

"In overseeing the debtor in possession, the bankruptcy court ensures that the debtor in possession performs its fiduciary duties. Should the bankruptcy court become convinced that the debtor in possession is not performing its fiduciary duties, section 1104(a) of the Bankruptcy Code requires the bankruptcy court to appoint a chapter 11 trustee to operate the debtor’s business and manage its affairs," he wrote.

The management team at Diamond Comics, which filed for bankruptcy back in January, has essentially lost the faith of the court and its key lender. That has forced the comic book distributor into a Chapter 7 bankruptcy.

Diamond Comics was a massive player

• Largest U.S. comic distributor: Diamond Comic Distributors, Inc. (often Diamond or DCD) is the world’s largest distributor of English‑language comics, graphic novels, and related pop‑culture merchandise to specialty retailers.
• Founded in 1982: The company was founded by Steve Geppi in Baltimore, Maryland, and grew from a single warehouse serving 17 retailers to a major industry player.
• Wholesale distributor to retail: Diamond does not publish comics itself. Instead, it buys from publishers and sells wholesale to retailers such as comic shops and hobby stores.
• Direct market focus: It operates within the direct market, a specialty retail system distinct from newsstand or bookstore distribution, and supports thousands of retail accounts.
• PREVIEWS catalog: Diamond produces the PREVIEWS catalog, a monthly ordering guide retailers use to order new comics, graphic novels, toys, games, and collectibles.
• Pop‑culture merchandise: Beyond comics and graphic novels, Diamond also distributes toys, games, collectibles, and other related merchandise to retail partners.
• Global reach: While U.S.‑based, Diamond’s network extends internationally and serves a wide range of retailers and vendors.
• Industry role: For decades, Diamond was the central distributor for most major publishers, shaping comic availability in shops (though some publishers have since moved to other distributors).
  Source: Diamond Comics

Diamond Comics forced into Chapter 7 bankruptcy

Diamond Comics has decided to move from a Chapter 11 bankruptcy reorganization to a Chapter bankruptcy liquidation.

"The decision comes after Diamond filed for Chapter 11 at the start of this year with the hope of restructuring the company," Publisher's Weekly reported. "That effort encountered numerous twists and turns as well as suits and countersuits, including a lawsuit filed by a group of publishers accusing Diamond of selling their titles the company had been holding on consignment without their permission."

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The company had few choices as its bank decided to pull its funding, according to the report. Now, the company will likely quickly move into selling off anything of value it still owns.

"What those assets actually are and who owns them will be determined by the bankruptcy court, and observers believe the Chapter 7 proceeding could also be a long one," according to Publishers' Weekly.

"The bottom line for publishers still caught up in the Diamond mess is that they are even more unlikely to receive much, if anything, of the money and/or inventory owed to them by Diamond."

Diamond Comics' bankruptcy timeline

• Diamond filed for Chapter 11 bankruptcy protection (reorganization) on January 14, 2025, in U.S. Bankruptcy Court in Maryland. This was intended to allow restructuring and sale of assets, according to PacerMonitor.
• The company sought to sell off key business units (e.g., Alliance Game Distributors, toy and collectibles units) as part of restructuring efforts under Chapter 11.
• Multiple bidders and legal disputes arose during the asset sale process, including a winning bid by Alliance Entertainment that was later contested and backed out amid lawsuits and allegations related to withheld contract information, according to Cosmic Book News.
• A joint bid by Universal Distribution and Ad Populum was ultimately approved by the bankruptcy court for the major assets of Diamond, with Universal and Ad Populum acquiring portions of the business, according to a Diamond Comics press release.
• Throughout 2025, extensions were granted for Diamond to work on its Chapter 11 reorganization plan, but the company continued to struggle operationally and financially, reported Bleeding Cool News.
• Creditors and industry partners protested unpaid inventory and other issues: Many publishers stopped shipments or moved to other distributors amid Diamond’s financial turmoil.

Diamond Comics' conversion to Chapter 7 bankruptcy (liquidation)

• In December 2025, Diamond’s bankruptcy case was formally converted from Chapter 11 to Chapter 7 bankruptcy, meaning the company will be liquidated rather than reorganized, according to PublishersWeekly.com.
• The move to Chapter 7 was driven by the failure to secure continued financing, particularly when JPMorgan Chase (the debtor‑in‑possession lender) refused to continue funding operations under Chapter 11, reported Bleeding Cool News.
• Under Chapter 7 liquidation, remaining assets will be sold off and the company wound down added PublishersWeekly.com.

Diamond Comics was basically left with no choice here.

"The courts have held that where the purpose of the Chapter 11 filing was only to obtain time to either sell or refinance a parcel of real estate, then the case should be converted to Chapter 7.  The rationale is that debtors should not be allowed to 'speculate at the expense of their creditors while remaining in possession of the property without having to pay rent, real estate taxes or insurance premiums,'" shared Newman, Simpson, & Cohen Attorneys at Law.

Legal experts make it clear that once a bankruptcy case converts from Chapter 11 to Chapter 7, the company no longer controls its assets or reorganizational destiny.

“Upon conversion of a Chapter 11 case to a case under Chapter 7, once a trustee is appointed, the trustee assumes control over the debtor’s estate, which involves managing and liquidating the debtor’s assets to pay off creditors,” noted Troutman Pepper LLP’s Creditor’s Rights Toolkit.

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