Just when you thought the Diamond Bankruptcy Saga had quieted down…a new and even more unexpected lawsuit has entered the arena.
As first reported at Graphic Policy, Sparkle Pop has filed a complaint against Alliance Entertainment, claiming that Alliance breached NDAs, stole trade secrets and engaged in “Tortious Interference with Employment Contracts,” and, in lay terms, meddled with Sparkle Pop’s acquisition of Diamond’s business assets.
Who the what now? Sparkle Pop is the holding company (a division of Ad Populum) that purchased the assets of Diamond Comic Distributors, Diamond Book Distributors, Diamond Select Toys & Collectibles, and CGA Collectible Grading Authority during bankruptcy proceedings. Alliance Entertainment was the high bidder for Diamond et al before cancelling the purchase on the grounds that “Diamond” had misled them about the termination of their contract with Wizards of the Coast. This decision also resulted in a legal complaint filed BY Alliance against Diamond.
The inciting incident for the Sparkle Pop motion was Alliance hiring seven Diamond employees, as widely reported last week. You can read the whole complaint here. (also embedded below.)
First my own thoughts: I have no idea what this is all about. From all reports, Sparkle Pop has made no statements to either publishers or the remaining Diamond employees about their plans for their Diamond assets, so just what business has been damaged is a legitimate question. Especially given that Sparkle Pop’s first act was to lay off a bunch of Diamond and DST employees (including almost all the remaining brand managers) and shut down DST. AND even more given that Sparkle Pop has not been paying vendors/publishers for new invoices.
Given that Universal is also hiring Diamond employees and is believed to be actually setting up a competing comics distribution business, this gets even wilder.
The complaint is fairly straightforward so you can read it for the details but a few notes that may be of interest.
The main complaint paints all of Alliances actions as “spurious” and nefarious:
Alliance abused the bankruptcy process to gain inside access to Diamond Comic’s employees, trade secrets, and proprietary information, all while delaying the sale of assets to legitimate purchasers. When Sparkle Pop finally closed the sale of Diamond Comic, Alliance pulled the rug out from under both seller and buyer, engaging in a sudden and coordinated raid to poach seven key Diamond Comic sales and marketing employees, effectively hobbling the business. Alliance also exploited its inside knowledge of Diamond Comic’s confidential information to usurp key distribution relationships with vendors and customers, further undermining the business.
Alliance committed these bad faith acts despite having signed strict non-disclosure and non-solicitation agreements from Diamond Comic that bar its conduct. Alliance has violated these strictures openly, effectively daring its counterparties and victims to sue if they want any hope of redress. This lawsuit responds to that challenge.
Some dates in the timeline are nailed down for whenever the book about all this is written, including the timeline of the 110 prospective buyers who signed NDAs to look under Diamond’s hood prior to the bankruptcy. Alliance signed the NDA in October of 2024. Ad Populum, LLC, the parent company of Sparkle Pop, signed the NDA on October 26, 2024.
One of the biggest questions I’ve had over the last few months is why Raymond James/Diamond rejected the higher Alliance bid for the lower combined Universal/Ad Populum bid, as declared in court filings on April 6th, which sparked a complaint by ALLIANCE to once again be named the winner. The Sparkle Pop complaint gives one take on what happened after the Alliance bid was declared the winner back on March 25th.
Over the next few days AENT and Diamond Comic exchanged drafts of a proposed asset purchase agreement. However, AENT insisted on including language that was inconsistent with the agreement placed on record at the auction. Accordingly, Diamond Comic proceeded to seek approval to sell its assets to the Sparkle/Universal group. 27. On April 6, 2025, AENT filed an adversary complaint against Diamond Comic and certain of its affiliates, seeking to be reinstated as the winning bidder.
According to Sparkle Pop, Alliance’s dropping their bid (which they claimed was due to the WotC deception) was “spurious.”
However, as demonstrated by Alliance’s course of conduct, instead of proceeding with the transaction as planned, Alliance used its position as the winning bidder to bully Diamond Comic into making further concessions. Furthermore, Alliance abused the bidding process to obstruct the joint bid of Sparkle Pop and Universal, who genuinely intended to purchase the Diamond Comic assets for fair market value. Alliance’s conduct delayed that process, imposing unnecessary costs on Sparkle Pop, Universal, and Diamond Comic. The bidding process also allowed Alliance to obtain key confidential information and trade secrets from Diamond Comic, which it then abused to effectively usurp critical company assets without paying for them.
According to Sparkle Pop, on May 16th, the day after the sale to Universal/AP closed,
Mike Schimmel, the head of sales at Diamond Comic, abruptly resigned. 40. On or about May 23, 2025, six other key employees in the sales and purchasing departments of Diamond Comic gave one week’s notice of their intent to resign from the company, including the Manager of Sales, Director of Ecommerce Sales, Business Development Manager, the second in command in the purchasing department, a purchasing manager, and an assistant manager in the merchandise team. The simultaneous resignation indicated that the resignations were coordinated.
Observation: Sparkle Pop omits mention of the mass layoffs that took ALSO place on May 16th – many Diamond employees have been “open to work” on Linked in since March, so it’s hard to blame anyone for taking a new job. Nonetheless, Sparkle Pop claims that they were all hired to spill valuable trade secrets.
BUT THAT’S NOT ALL. Sparkle Pop alleges that the new Alliance hires were set on stealing away Amazon business from “Sparkle Pop/Diamond.” Joe Lunday, who was Director of E-commerce Sales at Diamond, was hired by Alliance as Director of Collectible Sales, and according to Sparkle Pop, he reached out directly to Amazon.
[Lunday] reached out to his Amazon rep on his last day at Diamond Comic on May 30, 2025, to tell the Amazon rep that: (a) he would staying in the same industry as Diamond Comic at his next job at Alliance; (b) he would be working at Alliance in a similar role as his role at Diamond; (c) Alliance would be looking to build out their collectible program; (d) all Diamond Comic employees were jumping ship; and (e) going forward, Amazon should buy the items they had been buying from Diamond Comic from Alliance instead.
The Amazon representative confirmed to Joel Weinshanker, a principal of Sparkle Pop, that Mr. Lunday told him that all: (a) Diamond Comic employees were jumping ship; and (b) going forward, Amazon should buy the items they had been buying from Diamond Comic from Alliance instead.
Once again, it’s not entirely clear what Amazon buys from Diamond these days, as they are no longer selling Marvel, DC, Image, Boom, Dark Horse, IDW, or most other publishers. Maybe a ton of Dynamite comics? Toys? Games go through Universal/”Diamond” Games. Whatever it is, it’s substantial enough to cause a lawsuit.
Anyway, that’s all I got for now.
One final note: I find the use of the term “Diamond Comic” throughout this complaint highly amusing. It’s true that the actual name of Steve Geppi’s business is Diamond Comic Distribution, so it’s an accurate shortening. But I don’t think anyone has ever said the term “Diamond Comic” aloud. Try it yourself. It’s weird.
But not as weird as the whole kit and kaboodle of this mess.
I’ll have some more reportage based on conversations with retailers and publishers that I had at TCAF in the coming days.
