In a new twist, Alliance Entertainment has filed a lawsuit seeking to block Diamond Comic Distributors from backing out of its sale to Alliance and pursuing a different bid instead. 

Alliance’s filing requests that Maryland’s bankruptcy court issue a temporary restraining order prohibiting Diamond from selling its assets to any other company. Following an expedited hearing, it also asks that the court order Diamond to accept Alliance’s asset purchase agreement and pay for its legal fees. 

Diamond filed for Chapter 11 bankruptcy in January, and joint bidders Universal Distribution and Ad Populum (AP) were initially favored as the stalking horse participants in the process. However, Alliance emerged as the winner of the auction two weeks ago and expected to close the sale by April 10.

This outcome was challenged last week, when Diamond filed a motion asking the Maryland court to approve the sale of its assets to Universal and AP instead, believing it to be the superior bid. According to the negotiated asset purchase agreements, Alliance bid US$72.24 million to acquire most of Diamond’s assets, but not the Diamond UK business. Conversely, the joint bidders came in at US$69.1 million, with a plan for Universal to pick up Alliance Distribution and Diamond UK, and AP to control Diamond Comics, Diamond Select Toys and all other remaining assets. 

Alliance’s suit alleges that Diamond didn’t negotiate in good faith and secretly favored the Universal/AP deal, despite Alliance accepting all changes requested by the graphic novel and comic book publishing company after the auction closed on March 26. A hearing on these motions is set to take place later today.