The hearing on three key matters was adjourned until next Wednesday, April 2. Matters to be decided included the sale of the company to the top bidder (a final purchase agreement has not yet been filed, presumably because there are still outstanding issues); proposed bonuses for Diamond employees (to which the trustee has objected, see "Diamond Responds"); and Diamond's request to seal some information about the employees recommended for the bonus program.
The distribution agreement between Diamond and Image, filed as part of Image Comics' motion objecting to assignment of its agreement to an acquirer (see "Comic Suppliers Absent") included some interesting provisions, including the distribution fee, credit terms, and handling of credit risk.
The agreement covered Diamond's role as exclusive distributor to book channel retailers, and to some non-book channel retailers, outside of North America, beginning April 2024. It's an agency agreement, by which Diamond performs distribution services for a fee calculated on percentage of sales. For this agreement, Diamond's commission was 12.5% of sales (or 6.25% of retail on sales at 50% off wholesale).
Sales only through Diamond UK were an exception to the agency structure; those sales were made on a sale and return basis (Diamond could return up to 10% of what it received on an affidavit basis once a year) at 65% off retail.
Diamond made credit decisions and bore the bad debt risk, but only for a portion of the receivable: Image's production cost, estimated at 10% of the retail value of the goods purchased but not paid for.
Payment was due 90 days after the end of the month in which the sales occurred.
While it's unclear to what degree the Diamond-Image deal is typical, the terms give a much better idea than previously available on the structure of comic distribution agency agreements, and the margins and terms involved.
