Lugano Diamonds Files for Chapter 11

By Rob Bates | November 17, 2025

Lugano Diamonds & Jewelry, the high-end chain whose financial statements were questioned earlier this year by its private equity owner, filed for Chapter 11 in Delaware bankruptcy court on Nov. 16.

In a statement, the Newport Beach, Calif.–based company said that it is now looking for a buyer and that investment firm Enhanced Retail Funding has agreed to be its stalking horse bidder.

Lugano stressed it remains open for business, with Joshua Gaynor, the former Bulgari executive who was appointed company president in early 2024, serving as interim CEO.

In 2021, Compass Diversified (CODI) paid $256 million to acquire 60% of Lugano, which then numbered four stores. Cofounder Mordechai “Moti” Ferder retained the other 40%, and agreed to stay on as CEO.

Under CODI’s ownership, Lugano grew to 10 boutiques, though two of the new locations (in Greenwich, Conn., and Washington, D.C.) are now being closed, according to a Nov. 16 declaration from Lugano’s chief restructuring officer J. Michael Issa related to the bankruptcy filing.

“Until early spring 2025, Lugano appeared to be a highly profitable and rapidly growing business,” Issa said in the declaration. “Indeed, the company believed its 2024 revenues and operating income were approximately $470 million and $180 million, respectively. Unfortunately, the company’s performance appears to have been overstated.”

In May, CODI filed an 8-K reporting that it had found “irregularities in Lugano’s non-CODI financing, accounting, and inventory practices” and that Ferder had resigned as CEO.

“Within weeks of the 8-K disclosures, [Lugano] heard from close to 60 persons asserting substantial claims relating to alleged transactions entered into by Mr. Ferder,” Issa wrote in this week’s declaration. “These [transactions], which were outside Lugano Diamonds’ ordinary course of business, were generally joint investment agreements in which a third party would co-invest in a loose diamond, ostensibly for resale at a significant profit.”

Since the 8-K notice, approximately a dozen lawsuits have been filed against Lugano and Ferder, according to Issa. In June, Lugano also sued Ferder, alleging that he “concealed and misrepresented the nature of numerous financing transactions he entered into with third-party, high-net-worth individuals,” as quoted in the Issa declaration.

In a response to Lugano’s suit, filed Nov. 14 in Orange County (Calif.) Superior Court, Ferder denied the allegations and said the “case was filed to scapegoat [Ferder] and divert attention from [Lugano’s] own culpability.”

Top: Lugano’s salon in Palm Beach (photo courtesy of Lugano Diamonds & Jewelry)