This is a nasty mess. I’m pulling for Paizo!
For those of you who aren’t in this industry, this probably doesn’t make a lot of sense. But here’s the short version:
Imagine if you made your own jewelry and wanted to sell it. There’s a distributor who can get it into stores. You have to pay shipping to get your jewelry to them, but they handle the rest. When one of your pieces sells, the store gets a cut, the distributor gets a cut, and you get whatever is left.
Fast forward a few years. The distributor has a ton of your stuff in stores but also has a warehouse full of other pieces ready to be sent as stock is freed up. Suddenly the distributor stops all work and declares bankruptcy. You learn they’ve been trying to leverage their stock for loans with a private equity company. Now that company descends on their warehouse, saying they get to liquidate all the assets — including YOUR jewelry! — and keep all the money to cover what the distributor still owes.
Naturally, you’d call bullshit, right? The distributor didn’t buy your jewelry, they just had an agreement to help sell it. You don’t get paid until that happens. In fact, at any time you could have demanded your jewelry back!
But NO, says the private equity company. That jewelry is ours now. Sucks to be you.
That’s basically what’s going on with Paizo right now. For those who don’t know, Paizo makes Pathfinder, a “spinoff” of Dungeons and Dragons 3rd edition and the only game that comes *close* to competing with D&D’s industry dominance.
Diamond was their distributor, getting physical Pathfinder and Starfinder books into game/hobby/book stores.
A while back, Diamond declared bankruptcy. It would make sense that all the companies using them for distribution would get their stuff back, but their creditors claim *they* should get to extract the value owed to them first. Problem is, the value owed to the creditors is based on *stock that belongs to other companies*. They’re claiming they get to basically liquidate Paizo’s property without paying Paizo a dime, where Paizo et al are claiming that stuff still belongs to them.
Like I said, it’s a mess. And it deals damage to the industry as a whole. Even more reason to despise venture capital / private equity.
https://paizo.com/blog/paizo-restructuring-a-difficult-update-about-our-future
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