There were a number of additional events in the Diamond Comic Distributors bankruptcy this week, which we round up here.
At the hearing on Wednesday, April 2, the approval of the asset sale to Alliance Entertainment was delayed to April 7, presumably because the final asset purchase agreement is still being negotiated. This is the second delay (see "Hearing Delayed"), but still a fairly aggressive timetable.
The court approved the proposed key employee incentive plan and key employee retention plan proposed by Diamond and its restructuring consultants, opposed by the trustee, and responded to by Diamond (see "Trustee Objects"). The proposal provided for bonuses of over $1 million if thresholds in the sale prices of the assets were met (and that appears likely, depending on the final agreement), with over half coming in two payments to Alliance employees of $272,000 each. There's a big drop to the next largest, six payments of $40-$45,000, two for employees of Diamond and four for employees of Alliance. Payments of $30-$35,000 for three Diamond employees are proposed, with the remaining bonuses at $10-$25,000.
The key employee retention plan provides for bonuses totaling $241,900 for another 23 employees that stay through the closing of the asset sale, and additional payments of $35,000 for a handful of employees long enough to complete the sale of remaining assets, estimated as August 31.
Professional fees are mounting. Advisors to the unsecured creditors submitted their bills for February services. Berkeley Research Group, which advises on restructuring and creditor rights, billed for $466,568. Hourly fees range from $205 to $1395 per hour. Law firm Lowenstein Sandler billed for $497,246. Hourly fees range from $380 to $1610 per hour. Local counsel Tydings & Rosenberg billed for $83,718 at more modest hourly rates ranging from $350 to $625. In all three cases, 80% of the fees is to be paid based on these statements, with a 20% holdback.
That's over $1 million in fees for the unsecured creditor committee’s advisors for the month of February, only one of many reasons why companies avoid Chapter 11: professionals take a much higher share of the sale price than if bankruptcy was not filed.

Diamond Bankruptcy Round-Up
Posted by Milton Griepp on April 4, 2025 @ 3:17 am CT

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