Compass Diversified reaches settlement in Lugano bankruptcy case

Compass Diversified (NYSE: CODI) announced it has entered into a Settlement Agreement and Mutual Release, along with a related Plan Support Agreement, in connection with the Chapter 11 bankruptcy proceedings of Lugano Diamonds & Jewelry Inc. and its affiliated debtors.

The settlement was reached with Lugano, its official committee of unsecured creditors, and other parties in interest. It will be incorporated into Lugano's proposed Plan of Liquidation and establishes the framework for CODI's recovery from the Lugano estate.

Under the terms, CODI has agreed to support Lugano's proposed liquidation plan. Subject to creditor approval and bankruptcy court confirmation, CODI will be entitled to certain recoveries from the Lugano estate, including proceeds from the disposition of Lugano's inventory, tax refunds, insurance, and litigation claims pursued through a liquidation trust. In exchange, CODI and its related parties will receive a release of claims from the Lugano estate.

Larry Enterline, Chairman of the Board of CODI, said the settlement "accelerates the resolution of the Lugano bankruptcy, allowing the estate to move efficiently toward confirmation of a plan of liquidation" and "enables more timely cash recovery for CODI."

The settlement becomes effective only upon satisfaction of conditions outlined in the agreements, including the effectiveness of Lugano's Plan of Liquidation. CODI noted there is no assurance the plan will be confirmed or become effective, or as to the timing thereof.

CODI also stated it continues to advance a previously announced review of its management services agreement, which it expects to complete in the coming weeks. Full terms of the settlement are described in a Current Report on Form 8-K filed with the Securities and Exchange Commission on June 24, 2026.

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