There was a significant development affecting publisher clients of Diamond Comic Distributors and another major departure; we round up Diamond bankruptcy news here.

Diamond has requested the bankruptcy court to allow it to take ownership of the consignment inventory in its possession and sell it for the benefit of its creditors, rather than returning it to the publisher that owned it before the bankruptcy filing.

Diamond listed 182 vendors with which it had consignment agreements, which typically provide that Diamond store inventory and sell it on behalf of the vendor, which retains ownership.  Diamond is arguing that under bankruptcy law, it may take ownership and sell the inventory for the benefit of all its creditors.  The effect will be to make it impossible for those vendors to use that inventory to fulfill demand from retailers, and to add to the amounts Diamond owes those companies.

The consignment vendor list includes all major comic publishers, and many mid-size and smaller companies.  If approved, this inventory seizure and liquidation will be a major blow to the supply chain of backlist to retailers, disrupting availability on the titles in Diamond's warehouses; and another financial hit, in some cases a major one, to Diamond’s suppliers.

Diamond argues it has the right to take this action because none of the consignment vendors perfected their interest in the inventory through UCC filings and notices prior to the bankruptcy filing.  The bankruptcy court has scheduled a hearing on July 21 to give vendors a chance to object to the request; there are exceptions to the rule that might be used as grounds for those objections.

The apparent dismantling of Diamond Book Distributors continues with the layoff of Vice President of client Services Emily Botica, which will take place this week, according to a post on LinkedIn.  "It is with great sadness that I share the news that I will be leaving Diamond, with my last day likely sometime next week, Botica posted last week.  "Over the course of my 18 years with Diamond, it has been an honor and a pleasure to work so closely with so many amazing people and companies."

The first steps in that process were taken in May, when Vice President, Sales and Business Development Rich Johnson and his sales team were laid off in some of the first actions take after the sale of the company (see "Comic Executives Laid Off").

Botica had been at Diamond Book Distributors for over 18 years, and in her final position for over seven years.