Diamond Comic Distributors is in danger of administrative insolvency, and its records are in disarray, according to statements in an August 5 court hearing in the company’s Chapter 11 bankruptcy case, for which a transcript was filed on August 15.
Administrative insolvency refers to an inability of the bankrupt company to pay its professional fees and other essential costs after filing for bankruptcy. Those essential costs can include payments to critical vendors necessary to keep the business operating while in bankruptcy. When that happens, the Chapter 11 bankruptcy is typically converted to a Chapter 7 liquidation.
We know that some of Diamond’s post-petition debts that were supposed to be paid have not been,…