The two groups of consignment vendors in the Diamond Comic Distributors bankruptcy case are pushing back against Sparkle Pop, LLC, which emerged last month as a new obstacle to retrieving the nearly $50 million in consignment inventory held in the SparklePop warehouse in Olive Branch, Mississippi. Both groups, the Ad Hoc Committee of Consignors and the Consignment Group, filed objections to a Sparkle Pop motion that asserted that Sparkle Pop may have a warehousemen’s lien against the inventory under Mississippi law, because the Diamond estate, which contracted for Sparkle Pop to store the inventory, has not been paying the agreed-upon rent (see “Sparkle Pop Emerges as New Obstacle”).
The Consignment Group argues that Sparkle Pop’s claims on the inventory are not superior to the publishers’: that they’re not the company that owes the rent, the Diamond estate is; and that the court’s order under which the estate lost the option to continue its consignment agreements, which is under appeal by the trustee (see “Trustee Appealing”), needs to be decided before Sparkle Pop’s motion can be granted.
The Ad Hoc Committee of Consignors, like the Consignment Group, argues that it’s the Diamond estate that owes the rent, so taking inventory from the publishers doesn’t get rent from the right entity, and that the publishers didn’t contract with Sparkle Pop to store the inventory, so the lien cannot be used against them.
Both objections seek to prevent the imposition of a Sparkle Pop lien against the inventory, and for the storage of inventory and eventually for its return to the publishers.
Source: ICV2
