For months, the outcome has been obvious to anyone paying attention: Diamond Comic Distributors was not going to survive Chapter 11. On Friday, Diamond made it official, filing to convert its bankruptcy to Chapter 7.

That distinction matters. Chapter 11 is about reorganization. Chapter 7 is about liquidation. The company is no longer trying to fix itself. What’s left will be sold off, lawsuits pursued where possible, and whatever money comes in will be distributed according to priority. Most creditors should assume they’re at the back of the line.

The collapse wasn’t sudden. Diamond burned through roughly $12 million in legal, accounting, and administrative costs during the Chapter 11 process alone. Day-to-day operations before the asset auction were kept afloat by a debtor-in-possession loan from JPMorgan Chase, but Diamond continued accruing new obligations—largely tied to litigation meant to recover money to pay earlier debts.

Eventually, Chase stopped funding the exercise. Without lender support, Chapter 11 became impossible. Chapter 7 was the only option left. This is the outcome many publishers feared from the beginning.

Diamond Knew Where This Was Going

Diamond’s own filing doesn’t try to hide the chaos:

“As the Court is aware, these have been challenging cases.”

That’s an understatement. The asset sale turned into a revolving door of “winning bidders,” disputed terminations, and renegotiated purchase prices. Alliance Entertainment walked. Universal Distribution and Sparkle Pop ultimately acquired the assets—but only after forcing substantial reductions in what they agreed to pay.

Throughout this process, JPMorgan Chase extended and amended the DIP financing multiple times, finally setting a maturity date of November 14, 2025. When that date passed, Diamond asked for more runway. Chase declined, and that was pretty much it.

What Happens Now

Once the conversion order takes effect—five business days after entry—the case moves out of management’s hands and into those of a court-appointed Chapter 7 trustee. Robert Gorin, the Chief Restructuring Officer, steps aside. The trustee takes control, and all active litigation pauses temporarily while the trustee gets up to speed. That includes the most contentious issue in the entire case.

The Consignment Inventory Problem (The One That Actually Matters)

Here’s the core problem:

• For decades, publishers shipped inventory to Diamond on consignment.
• Many did not file UCC financing statements, because Diamond was effectively a monopoly and this had never been an issue before.
• When Diamond filed for bankruptcy, it claimed control of that inventory as estate property.
• Publishers objected.
• Diamond responded by filing over 30 adversary proceedings against those publishers.
• The dispute went to mediation. No global resolution was reached.

That inventory represents decades of backlist stock for many publishers. Liquidating it at pennies on the dollar doesn’t just cost them money—it permanently damages their ability to sell their own catalogs going forward.

Diamond still claims the inventory dispute represents recoverable value:

The Debtors’ remaining assets are comprised of claims and causes of action, as well as a disputed interest in the inventory subject to the Consignment Sale Motion.

Translated: lawsuits, arguments, and boxes of other people’s books that they will probably never see again, representing up to millions of dollars in market value. The bigger companies might be able to write that off, but for the smaller imprints, it’s enough to put them out of business as a knock-on effect.

By moving to Chapter 7, Diamond is effectively resetting the board. The trustee may pursue the same claims, but the incentives change. Several industry observers have suggested—quietly—that liquidation may actually give publishers a cleaner path to recovering inventory, possibly by purchasing it back at liquidation pricing rather than fighting through prolonged mediation. Whether that’s actually going to work, though, is anybody’s guess.

The Unsecured Creditors (Top 30)

Company	Unsecured Claim
PRH	$9,202,181
Bandai	$4,438,743
NECA	$2,682,994
Kin Kin Mould	$1,811,934
Todd McFarlane Productions Intl.	$1,734,814
Disney Consumer Products	$1,712,447
Hasbro	$1,064,378
Wizards of the Coast	$914,601
Exceeding Partnership Solutions	$843,496
Little Buddy	$694,628
Simon & Schuster	$600,144
Bandai Namco	$576,072
Lunar Distribution	$496,967
UPS	$476,398
Viz Media	$421,204
Catalyst Games	$401,483
Army Painter	$386,925
ARA	$378,827
Titan Publishing	$357,417
Square Enix	$315,295
Microsoft	$307,816
Pokémon Company	$280,375
Transcontinental	$243,541
Beast Kingdom	$237,903
Funko	$237,631
Publishers Services	$223,140
Dynamic Forces	$217,317
Pai	$211,331
Udon Entertainment	$202,694
Super 7	$163,686

Most publishers have written off these debts off months ago, and it’s one reason why the industry hasn’t seen a wave of collapses despite Diamond’s implosion.

Where This Leaves the Industry

Major publishers have been compensating for Diamond’s impending collapse for years, by building new distribution channels and getting to stores that way.

DC broke away in 2020 and shifted to alternative specialty distributors (primarily Lunar and UCS), deliberately avoiding a single choke point after the pandemic exposed how fragile that model was.

Marvel’s only real attempt at internal distribution was the disastrous Heroes World experiment in the 1990s; today it distributes through Penguin Random House Publisher Services, with Diamond reduced to an optional wholesaler. Dark Horse followed their lead and moved to PRHPS in 2022-23 after decades with Diamond.

Impulse never had an internal distribution model, and like most small and mid-sized publishers, once relied on Diamond but now uses standard third party distribution channels where available.

In a grim way, Chapter 7 is honest. The illusion of recovery is gone. The case resets, and the clock starts ticking again—this time under a trustee whose job is liquidation, not spin.

After nearly a year, creditors have seen little to no movement. That reality hasn’t changed. What has changed is that no one is pretending otherwise anymore.