Diamond Kills Humanoids

It seems that Humanoids Publishing has filed for Chapter 7 bankruptcy. In Chapter 11 bankruptcy -- which is what Diamond has filed under -- the idea is that, if you can get all the creditors to take only a percentage of what is actually owed them, then you can still run the business profitably. Marvel Comics actually filed under Chapter 11 back in 1996; they were able to restructure their debt payments and... well, you can easily see where they are today. Filing under Chapter 11 is, of course, no guarantee you can become profitable again, but just that you convinced a judge that you theoretically can do it. Chapter 7, though, is basically saying that's the end of the line; that no matter what you do, there is no chance you run the business and turn a profit. No amount of restructuring of debt, no amount of corporate reorganization, no buckling down is going to right things. All you can do is basically sell off whatever stuff you've got left, and let your debtors fight out how much money each one of them gets from that.

Obviously, Diamond's own bankruptcy earlier this year prompted all sorts of problems throughout the comics industry. Problems that, frankly, could have been much worse if several of the larger publishers hadn't switched distributors over the past 3-4 years. But we all knew there was going to be a ripple effect from Diamond's bankruptcy. Publishers would have problems distributing their books, and retailers would have trouble getting new shipments in to sell to readers. I haven't heard of any retailers closing because of this, but I've certainly heard plenty about several smaller publishers running into financial problems because Dimaond has held on to existing stock that should have been returned, and hasn't paid publishers for books they've already sold.

I also mentioned, back in June, that I was seeing concrete evidence that some publishers effectively halted production of everything while they looked for an alternate distributor to Diamond. They certainly didn't want to keep sending material to Diamond when Diamond wasn't paying what it already owed them. And while I've heard stories of several publishers running into cash flow issues because of these problems, I hadn't heard of a publisher actually shutting down because Diamond hadn't paid them yet.

I might be wrong -- there has been an absolute fire hose of comics industry news since January -- so I might have missed something, but I believe Humanoids is the first publlisher formally closing because of Diamond's issues. Not only is this severely unfortunate for all the employees of Humanoids, but everyone who touched their books. And that is the real devastation of Diamond's bankruptcy... that it's started a number of dominoes, none of which will fall favorably for anyone.

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