Many of us have been gripped by the corporate schadenfreude at the center of a LEGO consignment scandal that spilled out of the hobby space into the mainstream. However, it’s important for gamers to remember that the TTRPG industry has been struggling with its own consignment scandal for over a year, a situation that looks like it will continue to get worse before it gets better.
As we break down the situation affecting Paizo and many other TTRPG publishers, we need to remind readers that we at the Know Direction Network are not lawyers, nothing in this article constitutes legal advice, and we have a variety of connections to those affected by one side of this disagreement and none on the other. The purpose of this article is to lay out the events as we understand them, and how that affects us as TTRPG gamers and fans of Pathfinder and Starfinder.
Paizo Restructuring
Yesterday, June 9th, 2026, CEO of Paizo Inc Jim Butler shared on the Paizo Blog that Paizo must restructure its staff. This includes laying off twelve staffers (coordinated jointly by Paizo management and the United Paizo Workers union) and changes to the Organized Play Program.
Paizo says this is largely due to the company losing control of $10 million in Paizo inventory consigned to Diamond Comic Distributors, Inc. This stock was still in the distributor’s possession when Diamond declared bankruptcy over a year ago. Paizo also paid legal fees to fight JP Morgan Chase’s lien on the product. There is also the matter of Diamond fighting to maintain an exclusive distribution agreement with Paizo Inc despite the bankruptcy preventing them from distributing Paizo product.
Diamond Bankruptcy
In January 2025, Diamond Comic Distributors, Inc filed for bankruptcy. Though Diamond is best known as a distributor of comic books, the company also handled the distribution of TTRPG material. And this wasn’t just for comic shop gaming shelves. Diamond distributed to huge retailers like Amazon and Barnes & Noble. TTRPG publishers, like Paizo, signed consignment agreements with the distributor before Diamond filed for bankruptcy. The company then turned to JP Morgan Chase bank, receiving a $41 million Chapter 11 loan. Diamond expected to pay this loan back after selling the company to Alliance Entertainment, but that deal never came to pass.
After Diamond Comic Distributors, Inc could not repay its loan to JP Morgan Chase, the bank put a lien on the product in Diamond’s possession.
What Is Consignment?
When a product is sold on consignment, a company supplies a third party vendor with product to sell. The company retains ownership of the product until the vendor sells it. At that point the company gets paid and the vendor gets an agreed upon percentage of the sale.
By design, a consignment arrangement presents greater risk to the company than the vendor, because the company has invested their time and money into the product while the vendor has only invested time. That risk is not supposed to extend to the loss of the product.
What Is A Lien?
A lien is a claim of partial possession of assets when the owner of the assets is financially indebted to an investor. Essentially, if Party A owes money to Party B, Party A can’t sell their property with a lien on it without Party B’s approval, typically by Party A proving that the sale of the property works to pay off their dept to Party B.
Because Diamond Comic Distributors, Inc is indebted to JP Morgan Chase, JP Morgan Chase argues that the product in Diamond’s warehouses is theirs to recoup their investment.
Nemo Dat Quod Non Habet
This Latin phrase is at the core of the publishers’ argument against the validity of JP Morgan Chase’s claim. “No one can give what they do not have.”
Although we don’t know the specifics of the agreements Paizo and other TTRPG publishers had with Diamond, conceptually the company retains ownership of their property in a consignment agreement. Effectively, they believe JP Morgan Chase claims they have the right to seize property that doesn’t legally belong to Diamond Comic Distributors, Inc to pay off what Diamond owes them.
How This Affects Paizo
Paizo may be the second largest TTRPG publisher by compound annual growth rates, after only Wizards of the Coast, but it’s not a company that can brush off a $10 million dollar hit. Even if their books were returned to them today, the product would not have the same value as when it was shipped to Diamond’s warehouse. Gamers are often accused of being in a Cult Of The New. The value of most gaming products depreciates as the conversation moves on to the new hotness. Unfortunately, there’s no guarantee Paizo will ever get their stock back.
As Jim Butler outlined in the aforementioned blog post, the company needs to cut twelve employees, about 15% of the staff, starting with volunteers and the lowest seniority staff.
How This Affects Paizo Fans
Pathfinder and Starfinder players will be affected by these cuts directly and indirectly.
Directly, this affects Organized Play participants most. Pathfinder Society and Starfinder Society have always been a juggling act for Paizo, a demanding program that is not about the revenue but engaging a passionate portion of their audience, building good will, and exploring their setting with greater flexibility than large retail releases demand. But at a time when costs need to be cut, a loss leader is an obvious first choice.
Starting July 1st, Venture officers will no longer receive free PDFs of Paizo’s retail releases. They’ll continue to get free PDFs of Society releases, but are on the hook for their own sourcebooks and (I believe) other hardcover adventures. And starting in October, only one official Pathfinder Society scenario and one official Starfinder Society scenario will be released each month. To make up for the reduction in scenario releases, Paizo will update the Pathfinder Infinite and Starfinder Infinite license to allow fans to write and sell Society scenarios, as long as they follow new guidelines.
Indirectly, expect Paizo products to feel different. The quality won’t necessarily go down, but you may notice an intangible something missing compared to books you bought in the past. It’s not always obvious how the work of one employee improves a product, but the loss of what these twelve Paizo staffers contributed will resonate before long.
Just to editorialize for a second, this sucks. And to be clear, I don’t blame Paizo. In the current climate, it’s rare for a company to announce layoffs and for me to sympathize with the company. Of course I sympathize with the laid off staff more. The entertainment industry is not in a healthy place for creatives and now a dozen incredibly talented and invested artists, designers, editors, and the like are looking for work. But I do think Paizo’s messaging was on point, and working with their union led to the most fair handling of an unfair situation.
How Paizo Fans Can Help
While I don’t suggest going the Reckless Ben route, a community coming together has proven in the past to be a difference maker. Keep the conversation active. Reach out to your favourite influencers about the situation. Many legal influencers are probably looking for a unique angle they can take to cover consignment situations in hobby spaces. And when you see news sites post updates on the Diamond Comic Distributors, Inc filed for bankruptcy, share them. Comment with any questions you still have, especially if the post frames it as only a comic industry situation.
Finally, keep an eye open for the names of the laid off staff. If you’re looking for someone with their skillset for a project, reach out. If not, share their posts to improve the chances that someone who is looking for their skills finds them.
