Compass Diversified (CODI), the parent of BOA, Primaloft, 5.11, and Velocity Outdoor, reported that its jewelry subsidiary, Lugano Holding, Inc., has filed for Chapter 11 protection under the U.S. Bankruptcy Code.
In May, CODI announced that it would restrict investments in Lugano after identifying irregularities in the business’s financing, accounting and inventory practices. CODI also took measures to enhance its liquidity.
The bankruptcy filing was made under the direction of an independent special committee of Lugano’s Board of Directors, which determined that a Chapter 11 bankruptcy process represents the best path to maximize value for Lugano’s stakeholders.
“We support the Lugano board’s decision to file for Chapter 11 as the best choice for maximizing value from Lugano’s assets,” said Elias Sabo, chief executive officer of CODI. “The filing does not involve our other eight subsidiaries, which collectively continue to generate strong cash flow and perform well in their respective markets.”
CODI, as Lugano’s senior secured lender, has agreed to provide Lugano with debtor-in-possession financing to facilitate the bankruptcy process. As a result of the bankruptcy filing, Lugano will no longer be consolidated with CODI’s financial results, starting in the fourth quarter of 2025.
CODI said that it “continues to work constructively with its senior lender group and bondholders to ensure flexibility as it finalizes its financial restatement and completes other necessary filings with the Securities and Exchange Commission.”
“With Lugano’s decision in place, there is now a defined and orderly process to bring the Lugano matter toward resolution,” Sabo added. “CODI remains focused on completing our restatement and advancing our long-term strategy for the benefit of all of our stakeholders.”
CODI’s other subsidiaries include THP (The Honey Pot) in its consumer group and Altor, Arnold and Sterno in its industrial segment.
Image courtesy Lugano
