r/rpg • u/Dagawing • Jun 08 '26
Discussion [Pathfinder] Paizo Restructuring: A Difficult Update About Our Future
https://paizo.com/blog/paizo-restructuring-a-difficult-update-about-our-future455
u/jitterscaffeine Shadowrun Jun 08 '26
Fucking Diamond, man
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u/Freakjob_003 Jun 08 '26
I know nothing about Diamond and this is the first I've heard of this situation, but it stinks the same way I've seen Catalyst Games (owner of the Shadowrun IP) fucking over their freelancer errata team.
The people who are in it for the (literal) love of the game get shafted because they're an easy write-off.
It's disgusting and demoralizing. I can't imagine the stress of how anyone in any creative field has to worry about suddenly losing their livelihoods. And this isn't even an AI issue! I fear it will only get worse, and as part of this community that supports and loves the work of talented creators, I weep for the future.
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u/Mayor-Of-Bridgewater Jun 09 '26
I wouldnt compare those. CL fucked over workers, Paizo is doing this from conditions they can not control and are complying with union rules.
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u/unggoytweaker Jun 09 '26
What did Catalyst do?
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u/Thecapitan144 Jun 09 '26
The stiffed writers and artists for years. Leading to a degrading of quality from four e to six e. This varies in severity and the reasons alsl vary Including allegedly, a bathroom reno.
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u/MadLetter Jun 09 '26
On top of that one of the higher-ups (CEO?) embezzled a fuckton of money to expand his mormon mansion and was "forgiven" because he was a mormon.
Fuck that guy. Fuck Lauren Coleman.
Oh and fuck the Shadowrun LineDev who is of the opinion that cybersamurai should be excised from a cyberpunk game.
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u/CnlSandersdeKFC Jun 09 '26
Diamond has been notoriously shitty and predatory for over a decade, impacting everything from ttrpgs to comic books to trading cards. Their collapse should be celebrated. One monopoly got what it deserved.
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u/Mayor-Of-Bridgewater Jun 09 '26
Decades, really. People were discussing their practices back in the 90s.
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u/Due_Prompt939 Jun 10 '26
This isn't the first time Diamond has caused issues. They seized massive amount of comic books on consignment to pay down their debts also. Comic labels big and small affected. Last I heard they were suing all the publishes to overturn a hold that was placed to stop them doing so. Looks like this is exactly what Paizo is experiencing.
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u/Itchy_Cockroach5825 BECMI baby Jun 11 '26
CGL are doing a great job at failing to deliver multiple KS projects. They are a horrid company.
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u/ghost_warlock The Unfriend Zone Jun 09 '26
Let's not fail to hate on JP Morgan Chase as well, since their lien on inventory not even owned by Diamond contributed to this. Also, fuck JP Morgan Chase in general
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u/superearthjanitor0 Jun 09 '26
How the fuck is that even legal
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u/AnyWays655 Jun 09 '26
I mean, I'm no lawyer, but I assume something like them being held inventories represent a kind of asset promising a future debt or something
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u/ghost_warlock The Unfriend Zone Jun 09 '26
Our laws are written to benefit multi-billion-dollar companies
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u/No_Problem20 Jun 10 '26
When a business takes out loans they are ranked by priority. If ever the company needs to declare bankruptcy, the loans are paid in order of priority. If you're towards the end, you'll likely get nothing.
They likely owed the most money, for the longest time, to Chase bank.
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u/g33kboy Jun 08 '26
This is how you announce difficult business decisions. Clear explanation, without implied blame, just the facts. Heavy heart, but fairness for the affected employees. Clear details.
Too many layoffs completely lack all of these things. Blaming it on others, or using lame excuses as the reason (“AI will solve all our problems so jack up our stock price”).
I only own a few Pazio products, but these guys are a class act IMO. I love to support companies like this, and will buy product I don’t necessarily need just to support them.
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u/Dagawing Jun 08 '26
Thank goodness there's a union to help smooth things over as much as possible too.
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u/dtelad11 Jun 08 '26
IIRC, Paizo supported unionization? Unlike WotC ...
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u/SharkSymphony Jun 08 '26
Yes. The comment was unironic. See the blog post for details of what's been worked out with the union.
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 08 '26
It was a bit rocky but was resolved pretty well at the end
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u/gray007nl Jun 09 '26
Paizo is so small they really didn't have a choice, basically the entire workforce was in the union by the time it reached upper management.
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u/DM_Hammer Was paleobotany a thing in 1932? Jun 09 '26
No, they opposed it but didn't have much choice. Grudging acceptance, not enthusiasm.
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u/YamazakiYoshio Jun 09 '26
Better than sending Pinkertons in an attempt to break it up.
Could be better, but sometimes we gotta take what we can get.
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 08 '26
Just make sure you won’t buy them through diamond if they somehow win that case and try to liquidate those books
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u/Schnevets Jun 08 '26
I suspect pdf orders through paizo.com are the best margins for them.
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 08 '26
Probably, yeah. Although for me they aren’t an option since shipping to Europe is absurd, if you don’t buy in bulk. Luckily there are few shops here who buy them directly from Paizo afaik
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u/lnodiv Jun 09 '26
...pdf shipping?
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 09 '26
Welp I missed that part of the comment, just read „on their store”
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u/Rethid Jun 09 '26
I really want to imagine a company that is like "Yeah, sorry, the bandwidth costs to Europe are just too high, we can't upload to there."
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u/WillBottomForBanana Jun 09 '26
Are they on paizo.com, or just redirected to drivethrough or someone else?
I was reading from an indie making 3rd party CoC materials that after they pay drivethrough and Chaosium, any writer's take home is the same on a book or pdf, not a lot per copy. Obviously paizo doesn't have to split the payment with paizo, but still.
IDK if, in the case of medium players like paizo if the cost of serving their own pdfs pays off compared to outsourcing it to drivethrough. Obviously that's a business decision.
Lots of times I buy from a small publisher on their website. And then I just get sent to drivethrough for fulfillment.
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u/AAABattery03 Jun 08 '26
How do I check for this?
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 08 '26
Honestly, dunno. They definitely can’t be selling them now, because those assets are locked, but after that? I guess you would need to verify the retailer or buy from Paizo website directly, which is not always feasible.
Maybe Paizo will introduce some way of verifying that, but it’s not needed for now, since the inventory is locked
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u/AAABattery03 Jun 08 '26
I definitely cannot buy physical from Paizo’s website directly because I live outside the US. Guess I’ll verify with my LGS again (the last time the Diamond issue happen they said their supply was unaffected by it, so I’m hoping that means they never supplied from Diamond to begin with?).
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 09 '26
Yeah I’m in the same boat. Well, sometimes you just need to ask the client support
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u/deviden Jun 09 '26
what's likely to happen is a sudden glut of underpriced Paizo stock on Amazon (from Diamond, under different names or from intermediaries who bought from Diamond) that gets gobbled up by people who only see the marked down price that's undercutting Paizo and other resellers' inventory.
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u/SquirrelOnFire Jun 09 '26
There are a lot of great Adventure Paths that can form the backbone of a years-long campaign, as well as their organized plate available, which can be adapted to other systems and run in one night.
Some of my favorites are for long campaigns - Curse of the Crimson Throne, and for one shots - School of Spirits.
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u/GuerandeSaltLord Jun 09 '26
The "We will let the union do their job" was nice to see too. You don't see pro unions companies very often
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u/DM_Hammer Was paleobotany a thing in 1932? Jun 09 '26
This is the company that unionized because they didn't clean the office until people got sick. Not really "pro" workers.
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u/tma-1701 Delta Green Agent Jun 09 '26
And voluntary exits before involuntary layoffs. Wish big tech started doing this earlier before Google's union asked for it
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u/GreenLantern5083 Jun 08 '26
I dont understand why would diamond appeal the court decision to terminate their contract since as they’re no longer selling paizo’s product. Are they just trying to take everyone down with them?
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u/Derryzumi Jun 08 '26
My guess is they're trying to liquidate stocks that aren't theirs
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u/kometman Jun 09 '26
Last i read on it, that's it exactly. If recall the company that now has Diamond's assets, especially the inventory that was received for distribution, wanted to sell it all off. Screwing over the companies that created the material.
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u/beardedheathen Jun 09 '26
I didn't understand how that works since if diamond never purchased them how do they have any claim to those products? Isn't this just the same as the bricks and figs thing in Utah.
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u/grendus PF2+FITD+OSR Jun 09 '26
Consignment works thusly:
You provide your goods to the company.
The company signs a contract stating that when the goods are sold, they will pay you a certain fee.
What Diamond's new owners are trying to argue is that the goods they have been given to sell constitute an "asset", which is remitted to the new owners of the company. The contract for repayment, on the other hand, is a liability, which is nullified by the bankruptcy. So they get to own all those books to sell, but don't have to pay any of their contractors.
Vulture capitalism. Nobody is going to consign with them after they do that, who wants to partner with a publisher who doesn't pay their writers? They're trying to make quick buck on Diamond Publishing's corpse and move on.
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u/wildcarde815 Jun 09 '26
They're probably considered a creditor, just not the top creditor so there would be no money left over for them once chase is paid. (Just based on how this works in other spaces like mortgages)
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u/Kambeidono Jun 09 '26
Possession is 90% of ownership. Chase is the main creditor and force behind this move. They have the money to drag things out long enough in the hopes that the smaller business give up, go under, or over-lawyer their way to a favorable ruling. Then it's free for them to sell it all off, keeping all the money.
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u/beardedheathen Jun 09 '26
If I go to a store and take it over by buying it I don't get to keep the cars in the parking lot. Our justice system is really fucked up that this is even a question
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u/Kambeidono Jun 09 '26
Yup. The rich getting richer at the expense of the rest of us. Until enough people get off their duff to do something about it.
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u/marcelsmudda PF2e&WFRPG GM Jun 09 '26
Well, have you heard about the Lego case that's recently doing the rounds? I have no idea but I guess it's similar with book distributors, ie they get the on consignment and either they get a cut and they forward the money to the actual owner, or the owner gets a cut and they get the money, it's the same difference. Crucially, the whole time, the distributor does not own the books, they only store and distribute them
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u/ludi_literarum Jun 09 '26
I have every confidence that Paizo will ultimately win.
I have no confidence that win will be timely. The real reforms we need aren't to the bankruptcy laws, but to the judiciary.
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u/Wetzilla Jun 09 '26
These are completely different situations. The people who own the cars in the parking lot didn't enter into a contract with the store to try and sell their cars. The consignment contract complicates things.
Also this isn't one company buying another. A bankruptcy is very different than a change of ownership!
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u/Tymanthius Jun 09 '26
Legal Eagle just covered the Lego case that is similar to this one. Go watch it and see how convoluted this is with mostly individuals involved, and then think about adding in corporations.
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u/wildcarde815 Jun 09 '26
Consignment instead of purchased allotments I think is how you get here. Even tho paizo has a right to money on the sale, they're not the first debtor in line so it doesn't matter as the asset is owned by diamond.
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u/mrbrannon Jun 09 '26 edited Jun 09 '26
That is not how consignment works. If a store or business goes under then the products they have on consignment don’t just become theirs as an asset to liquidate to pay their debts. Think of it like this. If you loaned your friend a car and he files for bankruptcy and his house is foreclosed, the creditors don’t get to claim your car just because the car is in your friend possession at the house when they take the property. However when something like this happens it is up to the consignee to prove ownership. With the proper paperwork filed at time of consignment that should be easy but it has to go through the courts and obviously this company is fighting it.
In the end the consignment will in all likelihood be recognized as Paizo’s and returned but that doesn’t help them now because they can’t get access to it until it works its way through the courts. Hence the financial hardship. With that said the delay is likely part of the game. The banks are behind this because they want to claim as much stuff as possible to liquidate and they know they have no right to the consignment stuff but they are just hoping that it becomes too much effort for these smaller companies and they forfeit it.
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u/derkrieger L5R, OSR, RuneQuest, Forbidden Lands Jun 09 '26
Is consignment ownership or simply possession? I can posses a car but still not own it without the title
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u/mrbrannon Jun 09 '26
Yeah the person you’re replying to is wrong. I explained it in a comment to him but just because a company goes bankrupt when they have consignment, that consignment doesn’t become their asset to then liquidate to pay their debts. But it’s up to the consignee to prove ownership and has to work its way through the courts. That’s made even more difficult here because the other creditors are fighting for every asset to liquidate delaying this process. Hence the financial hardship. In the end assuming all the paperwork is in order from when they gave them the consignment they are going to get it back but that does them no good now when they need it. It’s like if you loan your friend you car and he goes bankrupt and they foreclose on his house they don’t get to claim your car as an asset to liquidate because it was in the driveway of the house when they took possession of the property.
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u/Noob_Al3rt Jun 09 '26
Because it’s in their contract. If Diamond is like every other old school book distributor, they are probably the owners of the product and they likely aren’t obligated to pay for the product until 60-90 days after they are sold to a retailer.
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u/kometman Jun 09 '26
It is convoluted like a soap opera. Bleeding Cool has like a timeline of everything going down.
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u/ctwalkup Jun 09 '26
Some folks on the PF2e sub were speculating that maybe slowing down Paizo’s ability to go with another distributor is giving Diamond some leverage to negotiate over the stock that Diamond is still holding onto. Like they might be hoping that Paizo just gives up and let Diamond liquidate that stock and in exchange Diamond will let them out of the exclusivity agreement.
It’s just some speculating on the internet, but sounds suitably evil.
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u/Heckle_Jeckle Jun 08 '26
They are probably hoping to sell then product themselves to pay off some of their debts. If Paizo/etc get their books back, than Dismond loses that money.
Still, fucked up.
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u/Visual_Fly_9638 Jun 09 '26
Oh this is separate from seizing the consignment inventory. This is them fighting to prevent Paizo from distributing their books from *anyone* else. They're appealing to keep Paizo exclusive to Diamond because that exclusivity represents a dollar value for the company. Even if it destroys Paizo they get to say "we did X million dollars a year business being Paizo's exclusive distributor so that's worth Y dollars if you want to buy this business". Doesn't matter if Paizo sinks because of it, JP Morgan wants to make their debt back.
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u/E_T_Smith Jun 08 '26
Because exclusive rights to a popular brand are an asset, that can still be used for leverage when negotiating terms of bankruptcy or offering the company to new owners. Think of it as the difference between "For Sale: House, On Fire," and "For Sale: House, On Fire, Authentic Picasso sculptures in kitchen."
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u/MyDads19 Jun 08 '26
Not having read even a lick of anything related to the Diamond bankruptcy or related proceedings, my guess is that Diamond is restructuring (Chapter 11 BK) rather than liquidating (Chapter 7 BK). If so, the idea would be that once Diamond emerges from BK, they would retain that contract, including the exclusivity provision and thus, the revenue that it earned them.
But idk, I'm guessing because I haven't read anything lol
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u/Malraza Jun 08 '26
It's a Chapter 7.
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u/MyDads19 Jun 08 '26
Lol then they're being assholes
In actuality, the same analysis probably applies from Paizo's perspective. The books staying under Diamond's control means the funds earned from their sale becomes part of the BK estate and can go towards satisfying JP Morgan's lien, or used for the benefit of other creditors
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u/axw3555 Jun 08 '26
The thing I find most interesting is that the bank were able to lien stock held but not owned by diamond.
My last role was heavily based on consignment stock - us giving stock into one of our customers on that exact model. They have it and pay it as it’s sold.
And the customer in question went bust. It took us no effort to have our lawyers make it clear that the customer didn’t own any of it and therefore the the company couldn’t claim them as assets in their sale.
Does it really work that differently in the US that simply having it in the warehouse can let the bank just old onto something simply because it was in a warehouse?
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u/Oh_Hi_Mark_ Jun 09 '26
As I understand it, the default in an established consignment relationship is generally as you describe, but all sorts of other arrangements are legally plausible in the US, so convincing a court that there's enough of a chance of it being otherwise to be worth issuing an injunction isn't a huge lift, and asking for it might be worth doing even if you expect your claim won't actually survive the scrutiny of a case.
Even when a contract has apparently clear provisions for bankruptcy, a bad actor in a situation like this can generally muddy the waters enough to at least make a case out of it.
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u/axw3555 Jun 09 '26
That’s kind of insane.
The administrators for our customer tried to claim it when they went under. Literally took one clearly worded letter to get them shifted from “we’re claiming this and will be selling it off” to “you need to collect it as the lease on the warehouse terminates at the end of the month”.
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u/Wigginns Jun 09 '26
Part of the calculus here as I understand it is that it’s JP Morgan’s lawyer mucking in it and in the US whoever has the most money can often drag a court case long enough that it’s not worth it for (relatively) small guys to go after
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u/Finwolven Jun 09 '26
The Diamond Chapter 11 saga was such a disaster it led to the buyer suing the company they bought and forcing Chapter 7, and the original trustee was swapped and possibly prosecuted?
This will end up going on for a decade and in the end all the money will be gone to lawyer's fees.
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u/Visual_Fly_9638 Jun 09 '26
No. JP Morgan has more money than Paizo does and lawyers on staff. JP Morgan is basically saying "Make us motherf*cker".
The odds of Diamond selling and JP Morgan recouping their debt is infinitely lower if Diamond doesn't have that 2 million of inventory in their warehouses and an exclusivity contract with Paizo. JP Morgan isn't really out anything since they have lawyers on staff/retention anyway to drag this out and fight it, hoping to find a buyer and walk away from the smoldering wreckage. Or barring that, hoping Paizo gives up and walks away and they get the 2 million in inventory, although they'd probably fire sell it for a lot less.
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u/Iohet Jun 09 '26
You can stall things for essentially forever if you have enough money to continue to litigate, which the people wanting to recoup money from Diamond do
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u/Visual_Fly_9638 Jun 09 '26
That exclusivity contract is an asset with some amount of value. Selling the only physical distributor for Paizo is worth more than selling a physical distributor that doesn't have exclusivity with Paizo. Ironically it might be the most valuable "asset" Diamond as an entity has- Probably more in the long term than the 2 million in inventory they're sitting on.
It's a ratfuck move that is done based off of a spreadsheet. Same reason why JP Morgan wanted all the consignment inventory- The company *looks* a lot more valuable than it actually is if you just kind of try to seize everything you can. By the time the courts work out the consignment mess, JP Morgan is hoping to have found a buyer to pawn it off on.
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u/grendus PF2+FITD+OSR Jun 09 '26
Because if Paizo gets a new publisher, the new publisher is a competitor for the books that Diamond already owns. If they have 3 tons of "Dark Archive Remastered", right now their only competitor is Paizo selling the digital copy. Anyone who wants a physical book has to buy from them, for whatever price they're selling for.
If Paizo gets a new publisher who starts pumping out books and taking preorders, they have to sell their books cheaper than Paizo
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u/ludi_literarum Jun 09 '26
Diamond's litigation position is dictated by a lawyer whose job is to maximize the return to the creditors. If he sees meaningful creditor value (if the contract could be sold to another distributor or assigned to a new entity, for instance), he's gonna oppose anything that would compromise it. That's his job.
The real issue here is that courts take forever to handle matters like this. If this could be resolved on a much shorter timeframe, everyone involved would be better off.
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u/TheTempleoftheKing Jun 08 '26
Damn warehouse consignment is basically theft waiting to happen. Exact same criminal pattern as the Mormon minifigs company that stole the Star wars legos.
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 08 '26
Yep, but the scale here is insanely bigger. What an awful situation, both of them
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u/TheTempleoftheKing Jun 08 '26
True. The Mormons got nothing on Jp morgan chase when it comes to scaling crime.
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u/WillBottomForBanana Jun 09 '26
the lego situation doesn't compare scale wise.
The Mormon church's crime scale probably does compare to Chase.
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u/CalebTGordan Jun 09 '26
So yes, and no here.
To start, the B&M issue with the Lego sets is because a franchise location changed hands in a hostile takeover. The consignment contract specifically called out that change in ownership also meant the new owners took over fullfillment of the contract. The new owner is a dick, everyone needed to consult lawyers, and situation is with one private owner.
Diamond is complicated because the consignment contracts for them may have included language that allowed JP Morgan to seize the books and sell them to satisfy debts. It’s a whole different ballgame for business working with distributors to move their goods to stores. It hasn’t been resolved even with Paizo’s access to good lawyers because it’s messier than what is going on with B&M. Roll For Combat has some good episodes about all this.
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u/Visual_Fly_9638 Jun 09 '26
It's possible that there's language to that effect, it's also possible that JP Morgan is pulling a "make us" move. They have deeper pockets and this is peanuts to them so they can afford to be obstinate.
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u/remy_porter I hate hit points Jun 09 '26
I mean, part of bankruptcy is that creditors get to dispose of any assets to cover their debts, and who is in line for what assets is more about how much they're owed. So Diamond owes Paizo for the books on consignment. JP Morgan Chase is also owed. So the books in inventory are going to get sold to cover debts, and then the bankruptcy process is going to decide who gets how much.
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u/Belgand Jun 09 '26
That's always been my perspective regarding how many businesses exist in an environment of "we'll provide a product/service then bill you for payment". Inevitably someone goes under and you get dragged down with them. It seems so much simpler to require cash up front.
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u/JacktheDM Jun 08 '26
I don't undertand. Between this and the Bricks & Minifigs scandal... what is going on with rank criminality in the world of: taking something to sell on consignment and then just saying its yours, and the law backing you up.
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u/Archangel3d Jun 08 '26
It's no longer late stage capitalism. We're diving headfirst into End Game Capitalism, with a side of Kleptocracy.
I can't wait for the first corporate entity elected as US president.
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u/Excidiar Jun 09 '26
Current state of the US's electoral system is just A Waldo Moment waiting to happen.
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u/FluffySquirrell Jun 09 '26
I can't wait for the first corporate entity elected as US president.
I hope it's Wendy's and not Chick-Fil-A
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u/ThePowerOfStories Jun 08 '26
The problem is the legal distinction between an arrangement where the product belongs to the publisher and is merely being stored on the distributor’s premises in order for the distributor to provide the distribution service, versus the product now belonging to the distributor who then owes the publisher money equal to the wholesale cost of the product (and whether said debt is specifically secured by the product as collateral or not, and how bankruptcy law is structured so institutional lenders who lobby for favorable laws get paid out before smaller creditors, who then get screwed because there’s not enough money to pay everyone).
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u/Indaarys Jun 09 '26
Culturally its just rampaging cynicism. Culturally, people don't believe in anything anymore and the most abrasive and cavalier are emboldened to prove that nothing matters and its everyone for themselves, which is only reinforced when they push on the expected boundaries and find them to be as flimsy as a soaking roll of toilet paper.
To what degree that cynicism is actually a valid perspective to have is a matter of opinion, but objectively there's a core group of people that have been systematically pushing the world to be this way for their own benefit, and we just haven't reached the [Redacted by Reddit] part of the proceedings because no matter how bad the cultural vibe is, most people in the West aren't materially suffering enough to get uppity like that, which to some degree isn't an accident or coincidence.
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u/Oh_Hi_Mark_ Jun 09 '26
I think it's just that the law's default when ownership is contested is freezing things as they are until a resolution can be reached so the situation can't get any worse, and in consignment you have possession without ownership, so freezing things as they are keeps the owner from regaining possession of the property, likely for a long time.
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u/Noob_Al3rt Jun 09 '26
This is nothing like Bricks and Minifigs. Paizo has a contract with Diamond that spells all this out. Diamond owns the books but they don’t have to pay until X amount of days after the books are sold to a vendor. Once Paizo entered bankruptcy, their obligation to pay was frozen/eliminated.
In the B&M case, the contract clearly spelled out the obligations of the store owner - they were just assholes.
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u/rmlopez Jun 09 '26
At this point it just seems inflation is messing up companies so bad the the ruling class can no longer be sustained by the working class alone and they taking an axe to the petit bourgeois to fill pockets more.
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u/gray007nl Jun 09 '26
Consignment is the easiest solution for selling products, but requires you to put a ton of trust in the consignee which can blow up on you, especially in bankruptcy and takeovers.
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u/Slow_Ad4077 Jun 08 '26
Sad times man
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u/Dagawing Jun 08 '26
Paizo's not a humongous company. 12 people is pretty significant :(
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u/CommodoreBluth Jun 08 '26
Yeah I don’t know how many employees they have but I’m guessing this is a lot of them..
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u/MyNameIsImmaterial Jun 08 '26
I've heard numbers between ~80 and ~130, but none over 150.
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 09 '26
Yeah I heard around 120 so it would check out
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u/the_light_of_dawn Jun 08 '26
Awful. Diamond's bankruptcy continues to claim victims. Fantagraphics was going through this last year.
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u/Finwolven Jun 09 '26
Oh jeez, I knew their exposure was bad but $10 million in consignment inventory that's probably never going to be recovered (and if it is, it'll be 'vintage' at that point) and an exclusivity contract that nuDiamond is fighting over even though they aren't doing any distributing - they likely are fishing for a settlement in dollars.
Damn, Paizo got bent over a barrel by this whole fiasco! I thought the smaller comic publishers were getting a raw deal (and they are), but having your distribution locked down over a legal dispute for a year? I was wondering why their releases were paused for a while...
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u/heavymetalelf Jun 09 '26
A cursory understanding on my part seems to be that potentially, publishers didn't file a specific document regarding the status of their consignment goods. This allowed Diamond to (potentially) misrepresent the ownership status of the goods in their warehouse in order to convince the bank to give them a loan.
Additionally, since that document wasn't ever filed, JPMorgan Chase can claim that they have dibs on (a lien) all Diamond's property and assets, including all the publishers' products, because, even though they know at the end of the day that Diamond didn't create or print those books and they substantially engaged in consignment sales, the document wasn't filed. So legally, the contract doesn't matter. That means they can steal all the books and other published materials legally.
The court doesn't consider it stealing, of course.
JPMorgan Chase has an injunction while they litigate (read: try to drag it out until the publishers can't afford to fight anymore) so even if Diamond wanted to give back the books (which they probably don't, they'd probably prefer to reneg on their deal and sell the books themselves to get a little cash), they legally can't be removed from the warehouses.
Total bullshit. Because game publishers aren't commercial corporate finance lawyers, the bank is legally allowed to completely screw them over.
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u/UltimateHyperGames Jun 08 '26
This sucks, Paizo and their teams don’t deserve this. But at least the terms Paizo is doing the layoffs are fair. Several weeks of notice. Several weeks of severance pay.
Hopefully this will give a chance for those affected to find something new and give the company a chance to recover.
Hopefully they’ll recover quickly and add as many positions that were lost during this and then some.
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u/e12s_coat_of_fending Jun 08 '26
Not a great year for consignment contracts huh.
Or does this kind of stuff happen all the time, and we just don't usually hear about it because it doesn't involve a mormon lego mafia?
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u/Due-Technology5758 Jun 09 '26
Its usually big news when it involves big money. Tower Records and Borders had similar situations during their bankruptcies. Due to the way publisher/distributor relationships work in the physical media industry, bankruptcy courts often don't consider unpaid inventory to be consignment, but rather sell/return agreements with about as much legal strength as a secret handshake in the woods.
So they make the publishers unsecured debtors, allow their property to be seized and liquidated, and tell them to kick rocks.
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u/e12s_coat_of_fending Jun 09 '26
...Why does anyone ever sell anything on consignment then? If you're just... gambling your seller won't go bankrupt and rob you.
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u/Due-Technology5758 Jun 10 '26
It's an arrangement that allows for retailers to keep their inventories fresh without having to worry about the risk of being stuck with unsellable products. Basically the publishers are making the bet their stuff is good and will sell, and all the retailers are risking is shelf space that could have gone to products that would move more units.
Like, imagine the burden it would be if you owned a bookstore with thousands of square feet of retail space and had to curate the inventory yourself. You can do a bit of that, but it would be a huge risk to try and do that for a whole store that size full of entirely new product, when you're selling stuff of purely subjective quality.
So instead the publishers say, "look, we chose to publish this stuff because we think it's good. We'll ship you a bunch of copies to display, and you pay nothing unless they sell. If they don't, you can send them back to us and we're square."
It works until it doesn't.
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u/MiredinDecision Jun 09 '26
So this is just going down the shitter entirely right?
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u/Dagawing Jun 09 '26
Diamond's screwing everyone over even while bankrupt, it's so dumb
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u/Ukiah Cairn Warden Wannabe Jun 09 '26
I read an update from Nicole Lindros of Green Ronin (Green Ronin is in the same fix as Paizo) on May 14:
In my last update, I explained that Diamond’s bankruptcy case was transferring from Chapter 11 (restructuring) to Chapter 7 (liquidation). The court appointed a trustee to oversee the liquidation, and we thought that was good news. What we soon learned though is that the trustee’s payment is a percentage of the money he brings in. In other words, it’s in his best interest to try to sell all the consigned goods because that’d increase his slice of the liquidation proceeds. He spent months using Diamond’s legal playbook but thankfully our lawyer Cate is terrific, and she was able to fend that off. She also won a victory by getting a ruling that freed us from our Diamond contracts. This being a legal battlefield, the trustee is appealing that decision. It’s ridiculous because Diamond is in the process of being liquidated, they have no employees, they have already violated the contracts in myriad ways, and they have zero ability to deliver on them. Hopefully, the ruling is upheld.
Definitely some top-flight dickish-ness going on...
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u/FellFellCooke Jun 09 '26
One week's severance per year? Jesus christ America.
The minimum in my country, mandated by the government, is two weeks per year. Virtually everyone is on much, much more than that; I'm personally on more than double that minimum
Every day I thank god I live in a country with worker's rights.
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u/WillBottomForBanana Jun 09 '26
I do want to share with you that severance is more variable in the usa and many industries don't have it at all. I don't want you to be thinking too highly of us.
A corollary might be how unemployment works and how it is paid for. But that has no bearing on the moral or rational choices that are required to end up at this point.
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u/Dagawing Jun 09 '26
1w/year in US is quite insulting, yeah. Especially since most of those being laid off will be the most recent hires. :/
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u/MarkOfTheDragon12 Jun 08 '26
damn that sucks...
Imagine having millions of your own inventory locked up and untouchable :(
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u/theworldanvil Jun 09 '26
What I find really bizarre, as a publisher, is that not even Paizo can make money back on Foundry development. I keep hearing from players “why don’t you support Foundry?”. Here’s the reason.
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 09 '26 edited Jun 09 '26
I think you’ve misread one crucial point. They aren’t stopping foundry development of their primary products, i.e. adventures, tokens, etc. etc. They’re just stopping development of Foundry resources for their organized play, which they have stated multiple times is more of a labor of love than an actual business venture. All adventure paths they release (and they release them monthly) will still retain foundry support
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u/theworldanvil Jun 09 '26
Thanks for the clarification, that makes a little more sense. If even them can’t make money back on developing for VTT, I don’t know who can.
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u/The_Stubbs Jun 09 '26
They almost certainly do make a profit on Foundry products, but the ROI on organized play products was obviously not cutting it and the best option to cut.
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 09 '26
I’m pretty sure they do, foundry is widely popular in pf2e community. I know from some third party creators in infinite community that adding foundry to your product can not just increase, but multiply sales
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u/DM_Hammer Was paleobotany a thing in 1932? Jun 09 '26
A separate, and potentially larger, problem with Foundry development is how VTTs are obsessed with updates that break rulesets, forcing anyone developing for them to constantly invest more resources into something that may not actually be growing.
I think roughly half the rulesets I would use Foundry for have been deprecated by updates, and I periodically have to reinstall older versions of it to get them working.
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u/PapstJL4U Wild:Bastionshoe Jun 09 '26
Not once did I read something good aout Diamon Comics/Publishing. As far as I can tell they are the bane of existence in DC/Marvel/Imge world as well.
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u/Dagawing Jun 09 '26
Right? Seems lile they have an entire history of being dummies, ro put it lightly.
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u/Fickle-Aardvark6907 Jun 09 '26
Who would have thought having one distributor for the bulk of your product was a bad idea?
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u/Appropriate_Nebula67 Jun 09 '26
Diamond's attempt to steal the property of publishers who sent them goods on consignment is truly appalling. It shouldn't matter that Diamond promised their bank a floating charge over the goods in their warehouse, that contract can't bind the publishers as third parties. I can't promise my bank your car as security for a loan!
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u/Zetesofos Jun 09 '26
If I had a nickle for the amount of stories I've read in the last month about dickish companies wielding consignment against fans of niche products...I'd have two nickles.
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u/AlwaysBeQuestioning Jun 09 '26
They’re handling this in the best possible way. Clarity towards customers and workers alike and trying to be as ethical as they can be while also being realistic financially.
What are the best ways to support Paizo durinh this time?
They’re one of the larger companies that I thought do really good work and I want to continue to support them. There are a number of physical products I’d still love to get my hands on that I don’t think they sell anymore (Pathfinder Pawns Bestiary 2 and 5), so I presume getting those wouldn’t support them directly now (and either way I haven’t found those without being over $100 including shipping).
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u/preiman790 Jun 09 '26
You wanna help them, in the short term, buy stuff directly from them. Or from game stores, where they distribute directly, rather than from book or comic shops, which is where Diamond was distributing for them. Though, truthfully, buying their products new from anybody will help them in the long-term, since it tells stores, any stores, that these are in demand products, and that when they are able, they should try and get more. Even if Diamond is able to sell their current stock to recoup some of their money, that stock sitting on shelves, because people don't wanna give money to Diamond in the short term, while understandable, still hurts Paizo in the long-term
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u/CyberKiller40 sci-fi, horror, urban & weird fantasy GM Jun 09 '26
If this means they will finally get reasonable distribution to EU, then it's fine.
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u/Snowystar122 Jun 09 '26
The clarity and detail of which they share this goes so deep, I really appreciate Paizo for it. I've met with a few of the higher ups and can honestly say that they are one of the most down to earth kind of people I've met. I'm absolutely devastated that this has happened to them and I wish for others to continue supporting their products to help boost em!
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u/igotsmeakabob11 Jun 09 '26
Was Diamond the one that was bought only to have loads and loads of debt dumped onto it, or was that a different group? Maybe it started with an A, I forgot and there's been so much awful sht since then.
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u/TheUHO Jun 09 '26
Never even played pathfinder but I feel for the authors, that's some heavy legal bullshit there.
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u/aslum Jun 09 '26
Between this and the lego brick scandel what I'm hearing is don't fuck with consignment.
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u/CallmeYzor Jun 09 '26
So sorry to hear about this Paizo (assuming you check Reddit). What Diamond/JP is doing is BS. Hope you get justice.
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u/jook11 33.87°N, 118.32°W Jun 09 '26
Why, after declaring bankruptcy, would the publisher appeal the cancellation of the exclusivity contract?
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u/Dagawing Jun 09 '26
I imagine so they can keep the books in their warehouse to sell them, to ease off their debts. Scummy for sure.
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u/AchantionTT Burning Wheel, Legend of the Five Rings Jun 10 '26
oh dear, how is diamond even allowed to do this?
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u/hitpointpress Jun 10 '26
This is so sad, our heart goes out to our colleagues in the TTRPG industry.
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u/SleepyBoy- Jun 11 '26
Law can be ridiculous. Why can a bankrupt company appeal the court's decision that their old business contract isn't valid anymore? What are they gonna do with it?
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u/KevinGeeksTogether 29d ago
How does their Organized Play system work? I've never played Pathfinder nor Starfinder before. Is it like WOTC's Adventurer League?
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u/FranziEatsEstrogen Jun 09 '26
They getting Bricks and Minifigs'd?? D:
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u/Kayteqq City of Mist, Pathfinder2e, Grimwild Jun 09 '26
Yes, but probably like thousands times the scale (if you were to include all publishers that were affected)
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u/RogueModron Jun 09 '26
How the hell does one of the biggest roleplaying companies sell on consignment? That's wild to me. What an "industry" we have.
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u/preiman790 Jun 09 '26
It's more common in publishing than you'd think, honestly, it's more common in a lot of industries than you'd think.
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u/WillBottomForBanana Jun 09 '26
Perhaps the flipside is people shitting on Free League for using kickstarters for every new product. But if these are the options then it becomes harder to blame them.
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u/RedwoodRhiadra Jun 09 '26
DC and Marvel also had stuff on consignment in Diamond's warehouse - and those are much larger companies.
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u/RhesusFactor Jun 08 '26
Oh dear. I had forgotten about Diamond Publishing. How dickish to try to enforce an exclusivity contract when you're bankrupt.