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Diamond puts Borders on hold

by  in Comic News Comment

Word is rocketing around the blogosphere that Diamond Book Distributors has suspended shipments to Borders stores because the book chain suspended payments to its suppliers earlier this week. Tom Spurgeon of The Comics Reporter got hold of an internal e-mail from Diamond Vice President of Purchasing Bill Schanes to several executives that says

This email is to confirm reports in the news that Borders is suspending payments to its suppliers, including Diamond. As a result, we have made the difficult decision to stop shipping them and put their account on hold, as of last week, until such time as they are able to resume payment.

Borders has been failing for a while (here’s a great account of what went wrong with Borders at The Atlantic’s blogs), and the chain confirmed on December 30 that it was delaying payments to vendors while it works on restructuring its debt. The next day, Calvin Reid of Publishers Weekly reported that one of the “big six” New York publishing houses had stopped shipping boos to Borders, and he added

Borders carries about $450 million in trade payables on its balance sheet and many publishers are anxiously waiting to see which houses will be paid and which will not be.

What’s more, with 509 Borders superstores and 168 Waldenbooks stores in the U.S., Borders is a significant segment of the retail market. Diamond handles distribution for Image and Oni Press, which dominated trade paperback sales in 2010 with multiple volumes of The Walking Dead and Scott Pilgrim making the top 20 graphic novels chart for the year, and it also handles distribution for Dark Horse, IDW, Dynamite and a host of smaller companies, from Abstract Studio to Zenescope. Borders may not specialize in comics, but it was a pioneer in bringing graphic novels and manga to the masses; ICv2 estimates that over 20% of manga sales in the bookstore channel are through Borders. If “delaying payments” turns into “never paying,” a lot of companies could take a big hit—and it’s reasonable to worry that some might not survive.

On the other hand, as ICv2 explains, if Borders does to into Chapter 11 bankruptcy, it may be able to pay its suppliers first, so it can get more product into the stores and start selling again.

Update: Here’s the text of the email, as received by Comic Book Resources:

This email is to confirm reports in the news that Borders is suspending payments to its suppliers, including Diamond. As a result, we have made the difficult decision to stop shipping them and put their account on hold, as of last week, until such time as they are able to resume payment.

DBD is actively seeking a resolution to this issue and will work with Borders to get shipments moving again provided that we can craft a solution that proves to be in the best interests of both DBD and our publishers. 

If you have any additional questions or concerns, please feel free to drop me an email or give me a call.