Geppi Family Enterprises distribution companies Diamond Comic Distributors and Alliance Game Distributors have suspended payments to suppliers as of today, a company spokesperson confirmed to ICv2. The companies told their suppliers of the payment suspension in messages this morning.
“As the world responds to the outbreak of COVID-19, our focus is on protecting employees, understanding the risks to our business, evaluating the risks to our industry and examining the Federal Government resources available,” the messages said. “While the full impact of this epidemic is still unknown, one thing is certain: supply chain disruptions have cash flow implications across the extended industry that can’t be underestimated. While we work to understand the current industry landscape, the unfortunate truth is that we are no longer receiving consistent payments from our customers. This requires that at this time, we hold payments to vendors previously scheduled to release this week. This is a difficult decision and not one we make lightly.”
The companies promised more information about a plan for payment later this week.
State and local lockdown orders and pleas for social distancing that impacted retailers started to proliferate about two weeks ago, and Diamond and Alliance halted normal operations last week (see “Diamond Halting Distribution of New Product, Alliance Shutting Down Completely”).
Two emails from Marvel to comic stores last week, an original and a “correction,” first indicated that Marvel was extending more credit to Diamond to help deal with store payment issues, and then removed that statement. A Diamond spokesperson told ICv2 that the reason the statement was removed in the “correction” was that it discussed a deal that was not finalized (see “Emergency Credit for Comic Stores?”).
There is likely very little cash coming in to Diamond and Alliance, as most of their retailer customers are closed and conserving cash to try to restart operations when the time comes. A suspension of payments gives the GFE companies more leverage in negotiating with their suppliers on a credit response to the coronavirus crisis and buys some time to figure out how to allocate the cash they have to best effect.
Who’s downhill from this flow? Comic and game publishers, merch companies, and other suppliers to the geek culture business, who will have less cash available to pay employees and freelance writers, artists, designers, and other creators. Buckle up.