The new owner of Diamond Comic Distributors has filed a motion in Maryland bankruptcy court seeking a temporary restraining order on Alliance Entertainment, adding a new round of litigation around the troubled Diamond bankruptcy.  The motion was filed by Sparkle Pop LLC, the entity used by NECA and WizKids owner Ad Populum to acquire the comic and merch distribution assets of Diamond.

Alliance Entertainment is the company that was originally awarded both Diamond Comic Distributors and Alliance Game Distributors as the result of an auction of the company's assets.  Alliance Entertainment terminated the asset purchase agreement and filed suit against Diamond and related parties after discovering that Wizards of the Coast was not an ongoing supplier of Alliance Game Distributors (see "Alliance Entertainment Sues Diamond, Again").

The new motion was filed as a result of Diamond and Ad Populum’s discovery that Alliance Entertainment recently hired seven Diamond employees and appeared to be taking steps to go into competition with Diamond's new owners (see "Alliance Entertainment Hires Seven from Diamond").  Those included Vice President – Sales Mike Schimmel, who was hired as Senior Vice President – Sales by Alliance Entertainment on the day after the sale to Ad Populum closed, and six other sales and purchasing employees.

The motion alleges that former Diamond Director of Collectible Sales Joe Lunday had a conversation with a representative of Amazon on his last day at Diamond in which he told the Amazon rep that he was going to Alliance Entertainment, which was building out its collectibles business, and that he hoped to do business with Amazon in his new role there.

The Sparkle Pop motion, filed on June 9, was preceded by a cease-and-desist letter sent by Diamond to Alliance Entertainment on June 2.

The motion requests a temporary restraining order for 14 days, and a hearing to consider a preliminary injunction, which would last until the trial on the matter.  The restraining order being requested would prevent Alliance Entertainment from continuing to employ those employees and from soliciting any current employees of Diamond; from entering into any agreements with Amazon or other companies that relate to Diamond's assets; and from using Diamond’s trade secrets, which were disclosed as part of the sale process.  The confidential information was disclosed to Alliance Entertainment under a non-disclosure and non-solicitation agreement, according to the motion.  In addition, the motion seeks compensatory and other damages to be determined at trial.

There is now significant litigation around both of the major parts of the Diamond assets sold at auction, with Alliance Entertainment suing over the information it was provided about Alliance Game Distributors, and Sparkle Pop looking for the court to intervene in actions taken by Alliance Entertainment that appear to put it into competition with the comics and merch side of the business.