Diamond Distributors: Exit Interviews

"Morale is very low across the organization."

A side case to the Diamond Comic Distributors Chapter 11 case is that of Sparkle Pop, LLC v Alliance Entertainment Holding Corporation and Alliance Entertainment, LLC. As with anything Diamond related, nothing is as simple as it seems.

Here’s what the case is about, as described in a recent declaration by President of Diamond Comic Distributors, Inc, Charles Parker:

Sparkle Pop, LLC ("Sparkle Pop"), a Delaware limited liability company, purchased certain assets of Diamond Comic and its affiliates (the "Asset Purchase") via an asset purchase agreement signed on April 27, 2025 (the "APA") and approved on May 1, 2025 by the Sale Order (the "Sale Order") issued by the United States Bankruptcy Court for the District of Maryland (the "Bankruptcy Court"). The transaction formally closed on May 15, 2025. The APA was enclosed in the Sale Order and filed on the docket in the Bankruptcy Court.

In 2024, Diamond Comic hired the investment banking firm Raymond James & Associates, Inc. ("Raymond James") to conduct the asset sale of Diamond Comic and one of its affiliates. Raymond James required all prospective bidders to sign a non-disclosure agreement (the "NDA") before permitting due diligence and soliciting bids from prospective bidders for the Diamond Comic assets. This included Alliance.

The prospective bidders for the Diamond Comic assets were given access to a data room containing key confidential information and trade secrets pertaining to the Diamond Comic business under consideration for acquisition, including but not limited to the identity and roles of key employees, information about critical customers and suppliers, and non-public financial information (the "Confidential Information"). This included Alliance Entertainment ("AENT"), a subsidiary of Alliance Entertainment Holding Corporation, a competing bidder for the Diamond Comic assets.

Raymond James declared AENT the original winning bidder for the Diamond Comic assets on March 24, 2025. Sparkle Pop was the back-up bid in a joint bid with Universal Distribution, Inc. ("Universal"). AENT failed to execute an asset purchase agreement for its bid within the deadline entered by the Bankruptcy Court. Raymond James and Diamond Comic subsequently approached Universal and Sparkle Pop to execute on the back-up bid.

On April 6, 2025, AENT filed an adversary complaint against Diamond Comic and certain of its affiliates, seeking to be reinstated as the winning bidder. The Bankruptcy Court accepted AENT' s position. My understanding is AENT executed an asset purchase agreement with Diamond Comic with a proposed closing date of April 25, 2025 and on April 24, 2025, one day before closing, AENT terminated its asset purchase agreement with Diamond Comic and pulled its bid. Raymond James and Diamond Comic once again asked Sparkle Pop and Universal to revise its bid, leading to the Asset Purchase pursuant to the AP A.

By signing the NDA, it is my belief given a review of the Ad Populum NDA, AENT was legally barred from hiring Diamond Comic employees or from attempting to exploit confidential information it learned from Diamond Comic during the sale process.

Joel Weinshanker, the CEO of Ad Populum and sole manager of Sparkle Pop called me on May 11, 2025 to let me know that Mike Schimmel, the head of sales at Diamond Comic, was resigning and Mr Schimmel did so on May 16, 2025, only one day after the AP A with Sparkle Pop had closed. Mr. Schimmel subsequently informed me on May 18, 2025 that he had accepted an employment offer with AENT. I subsequently informed Mr. Weinshanker of that fact on or about May 19, 2025. I later informed Mr. Weinshanker that, on May 27, 2025, six other Diamond Comic employees, three each in the sales and purchasing departments at Diamond Comic, gave notice of their intent to resign from the company at the end of the week, to join Mike Schimmel at AENT. This included the Manager of Sales, Director ofEcommerce Sales, Business Development Manager, the second in command in the purchasing department, a Purchasing Manager, and an Assistant Manager in the merchandise team. I indicated to Mr. Weinshanker that it appeared that the resignations of the seven departing Diamond Comic employees were coordinated. I confirmed to Mr. Weinshanker that I believed each of the seven departing Diamond Comic employees had access to Confidential Information, and that their access to said Confidential Infonnation was governed by the Diamond Comic employee manual ("Employee Manual"). The Employee Manual contains a section on Non-Disclosure for the Confidential Information, including but not limited to: sales data, customer lists and information, financial information, marketing strategies, contracts, pending projects and proposals, and vendor lists and information.

In short, Sparkle Pop and Diamond are accusing Alliance of using confidential information and poaching key employees from Diamond. As with all cases, and especially with Diamond, documents have been filed with accusations against everyone concerned, but one set of documents was filed under seal. That filing included the Diamond Employment Manual (dry and basic really) and the exit interviews of the key employees.

Now those exit interviews are up and available, if you know where to look. And they don’t paint a rosy picture of Diamond. All the exit interviews were completed on May 30 2025. Here’s the key takeaways for the reasons for leaving (Diamond). I’ve not redacted the names as they’re out there already for anyone to see.

Joe Lunday, Director of Ecommerce Sales. Accepted a role as Buyer with Alliance Entertainment.

Joe added he was concerned about Diamond’s future now that the sale to Ad Populum has taken place. Joe said he had a conversation with Chuck Parker, President, and was encouraged to stay but he had concerns about the future with vendors and the company, overall.

Joe also said morale is very low across the organization. Ad Populum has provided no communication, leading others to wonder how much they really care about employees. Further, they eliminated the necessary roles to keep any attempt at success very limited.

Additionally, Joe said when Joel Weinshanker from Ad Populum was in town and meeting with various employees, Joe’s meeting with him, which he thought was scheduled for 15 minutes, lasted 4 minutes. Joe’s impression was that it was 2 minutes longer than Joel would have liked. Joel came off as very off putting. Joe went into the meeting with questions for Joel. Joe walked away with the strong impression that Joel really only wanted the warehouse and was meeting with employees as a formality.

Also, when Joe walked into the meeting, Joel fist bumped him and then proceeded to read his name and title off of a piece of paper. Joel then asked what Joe did. Joe explained his role in sales and read sales data information from last year. He further described the business…Japanese, Taiwan, Amazon, Godzilla. Joel asked who his contact was at Amazon. Joel gave very little feedback during the brief encounter.

Joe shared that he later spoke with Steve Warble, Sales and Marketing Inventory Manager. Steve told Joe that his meeting lasted 3 minutes. He, too, had the same impression of Joel.

Additionally, Joe said he was speaking with someone else (he did not share who) and that individual said that Joel told them directly “you know I did not get a good first impression of you”. Joel later changed his tune when he admitted to needing the person.

Joe also said that he was told that Mike Schimmel and Tim Lenaghan were forced by Joel to make snap staff decisions…keep vs who to let go. This was hard for them to do given that many of the staff are in various departments.

Therefore, Mike and Tim did not have strong knowledge of good vs bad. They felt like that had to make random decisions vs well thought out.

Joe said, long term, he always struggled with pay. He felt Diamond lost a lot of good people due to the low pay they provided. Further the pay did not always match the talent.

Trista Peterson, Sales Manager. Accepted a role with Alliance Entertainment.

Trista said communication lacked and seemed siloed, particularly over the last few months. She found it frustrating that information was not shared with employees. Instead, information was learned from Bleeding Cool and ICV2. Because information was on the internet, retailers contacted Trista and her team. However, they were not able to answer questions.

Lee Butman, Merchandise Team Manager. Accepted a role with Alliance Entertainment.

Lee said he was looking for stability. He felt there was a lack of communication from Ad Populum, including that they were not forthcoming with plans and the future.

Lee said what he liked most were the people he worked with. He also said, in earlier years, Diamond felt like family. Once things began to change due to new management, Lee did his best to continue to maintain that type of atmosphere with his team.

Lee felt, unfortunately, that the last ten (10) years seemed more corporate and colder. Lee felt the last five (5) months were not good. He hated that he read so much about what was happening in Bleeding Cool, versus the Company sharing information.

Sadie Campos, Business Development Manager. Accepted a role as Collectible Sales with Alliance Entertainment.

Sadie felt communication across the companies was poor. She said she worked a lot with Diamond Select Toys & Collectibles, LLC (DST) and it was like pulling teeth to get them to respond to anything.

Overall, Sadie said when the announcement about the bankruptcy came out, she could handle that. She was disappointed that with the lawsuits up to what is transpiring now, there is no communication. She was frustrated that nothing was shared about DST being shut down after the sale and with no plan in place for “what’s next”. Sadie interacted with DST on a regular basis. She felt she was left to pick up the pieces with no direction. Sadie said morale is awful and stressed that a Team Hall needs to take place, so people understand what is going on.

Sadie also liked that the Company allowed employees to work remote. That said, her perspective was that many people took advantage of it. From day 1, Sadie said she could have listed names of people who should have been let go due to not working. Unfortunately, some of those people were still with the Company (Sadie did not provide names).

Ryan Shelkett, Executive Director of Applications Development. Accepted a role as Vice President of Purchasing with Alliance Entertainment.

Ryan was very disappointed in the lack of transparency with numbers and profitability. It made it tough to understand the financial aspect of the toy side of the business, as well as the lack of feedback on any progress.

Ryan knew what his salary was when he joined and was very appreciative of his salary. That said, when he joined, he was told he would receive a bonus of 10-20% of sales, based on metrics. Unfortunately, that was never provided. He said when he asked Tim Lenaghan about this, Tim continued to push the topic down the road.

The overall takeaway is that life inside Diamond Distributors was good for a long period of time, but, as things got more financially stressed, those stresses showed through. People weren’t happy, morale was failing and, once the lawyers jumped in with the Chapter 11, communication between management and employees became somewhat strained. As they do with such cases.

News came from external sources, such as Bleeding Cool, which should come as no great surprise as employees inside Diamond have been feeding information to the site from day one, as have the publishers.

There are four cases associated with Diamond’s Chapter 11. The original Chapter 11 case, two cases of Alliance v Diamond and the current Sparkle Pop v Alliance. With all of this legal stuff flying around, you can easily see why the lawyers are coining it in.

In other Diamond related news, publisher IDW are left holding the can for $700,000. As I was told only last night, ‘When publishers like Marvel, Dark Horse and IDW jumped to Penguin Random House, PRH only agreed to let Diamond Comics sub-distribute was if IDW guaranteed the Diamond payments. Now IDW is on the hook to PRH for $700k+ of invoices that Diamond didn't pay. And IDW has been skating along in all sorts of not doing well for a while.’

For a company not doing too well, $700,000 is almost enough for force IDW into a Chapter 11 case of it’s own. Now that Dyanmite, Fantagraphics, Oni Press and Titan have all bailed on Diamond, you wonder, who’s next? And the companies that have left for other distributors are now complaining that Diamond will not send stock back without being paid for it. In short, they’re holding publishers stock for ransom.

These are the things you don’t read about in the court documents, most of which paint a somewhat rosy picture of Diamond going about with business as usual. Mind you, right now that business is paying tens of millions of dollars to lawyers and not a lot, if anything, to publishers.

However, you read this kind of behind the scenes stuff and wonder, just what is going on with Diamond? This is a classic case of how to take a brand that has been in business since 1982 (although Stephen Geppi was around a lot earlier than that) and trashing it, completely, in under twelve months. Diamond no longer have any of the big publishers left, and they appear to be holding stock for ransom for everyone else.

Will the last person left pay the bills before turning the lights out? I doubt it.