Compass Diversified (CODI) Company Report

Compass Diversified (CODI) announced a restatement of its financial statements for fiscal years 2022 through 2024 due to deliberate and systemic fraud at its subsidiary, Lugano.
The fraud, which was isolated to Lugano, resulted in a reduction of consolidated inventory for 2024 by over $375 million (nearly 40%) and a decline in Lugano's revenue by more than 85% from previously reported levels.
Lugano filed for Chapter 11 protection on November 16, 2025, with CODI identified as its senior secured creditor.
Excluding Lugano, CODI expects full year 2025 subsidiary Adjusted EBITDA of $330 million-$360 million, representing mid-single digit plus growth.
The company plans to reduce its leverage ratio from an estimated 5.2-5.3 times by year-end 2025, targeting 3-3.5 times through organic growth and potential subsidiary divestitures.

3 days ago

Transcript

CODI Discusses Financial Restatement and Lugano Bankruptcy

CODI

Financial Restatement

Legal Proceedings

Guidance Update

Compass Diversified (CODI) announced a restatement of financial statements for fiscal years 2022 through 2024 due to fraud and financial misconduct isolated to its Lugano subsidiary.
The restatement resulted in a reduction of 2024 consolidated inventory by over $375 million (nearly 40%) and an 85%+ decline in Lugano's reported revenue.
Lugano filed for Chapter 11 protection on November 16, 2025, and will be deconsolidated from CODI's financial statements.
CODI revised its full-year 2025 subsidiary Adjusted EBITDA guidance to $330 million-$360 million (excluding Lugano), down from the initial $570 million-$610 million (including Lugano).
The company is prioritizing reducing its leverage ratio (currently above 6x) to a long-term target of 3-3.5x through organic growth and exploring subsidiary divestitures.

3 days ago

Transcript

Compass Diversified Details Lugano Fraud Impact and Financial Restatement

CODI

Financial Restatement

Legal Proceedings

Guidance Update

Compass Diversified (CODI) announced a pervasive, complex, and systemic fraud at its subsidiary Lugano, necessitating the restatement of 2022, 2023, and 2024 financial results.
The fraud led to a reduction of consolidated inventory for 2024 by over $375 million (nearly 40%) and a decline in Lugano's revenue by more than 85% from previously reported levels.
Lugano filed for Chapter 11 protection on November 16, 2025, and will be deconsolidated from CODI's financial statements, isolating its financial and legal obligations.
CODI updated its full year 2025 subsidiary Adjusted EBITDA guidance to $330 million-$360 million, excluding Lugano, and is focused on deleveraging from an estimated 5.2-5.3 times by year-end 2025 through organic growth and potential divestitures.
The company anticipates $50-$60 million in additional corporate overhead costs for 2025 due to the restatement and investigation.

3 days ago

Transcript

Compass Diversified Holdings Announces Lugano Subsidiary Files for Chapter 11

CODI

Legal Proceedings

Financial Restatement

Lugano Holding, Inc., a subsidiary of Compass Diversified Holdings (CODI), filed for Chapter 11 bankruptcy protection on November 17, 2025.
CODI, acting as Lugano's senior secured lender, will provide debtor-in-possession financing of up to $12,000,000 to support the bankruptcy process.
As a result of the bankruptcy filing, Lugano will no longer be consolidated with CODI's financial results beginning in the fourth quarter of 2025.
This bankruptcy filing does not impact CODI's other eight subsidiaries, which are reported to be performing well.

Nov 17, 2025, 11:08 AM

8-K

Compass Diversified Subsidiary Lugano Files for Chapter 11 Bankruptcy

CODI

Legal Proceedings

Financial Restatement

Accounting Changes

Compass Diversified (CODI) announced that its subsidiary, Lugano Holding, Inc. (Lugano), has filed for Chapter 11 protection under the U.S. Bankruptcy Code.
This decision was made by an independent special committee of Lugano's Board of Directors to maximize value for Lugano's stakeholders.
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's other eight subsidiaries are unaffected and continue to perform well, while CODI focuses on finalizing its financial restatement and other necessary SEC filings.

Nov 17, 2025, 3:56 AM

Press Release

Lugano Diamonds, a CODI Subsidiary, Files for Chapter 11 Bankruptcy

CODI

Legal Proceedings

CEO Change

M&A

Lugano Diamonds & Jewelry, a subsidiary of Compass Diversified Holdings (CODI), has filed for Chapter 11 bankruptcy protection to facilitate a value-maximizing sale of substantially all its assets.
The bankruptcy filing follows financial irregularities in early 2024 that led to the resignation of former CEO Moti Ferder and the appointment of Joshua Gaynor as interim CEO.
Lugano is seeking court approval for a $12 million debtor-in-possession financing facility, potentially providing up to $10 million in new liquidity, with Enhanced Retail Funding acting as the stalking horse bidder.
CODI, which acquired a 60% stake in Lugano for $256 million in 2021, supports the Chapter 11 filing, which affects only Lugano and not its other subsidiaries.

Nov 17, 2025, 3:55 AM

Morningstar

Compass Diversified Announces Extension for Restated Financial Statements

CODI

Financial Restatement

Legal Proceedings

Compass Diversified (CODI) announced that its senior secured lender group has extended the deadline for delivering restated financial statements to November 10, 2025.
The restatement is for the fiscal years ended December 31, 2022, 2023, and 2024.
This extension is due to an ongoing investigation into financial and accounting irregularities at its Lugano Holding Inc. subsidiary, which CODI's CEO described as a "sophisticated financial and accounting fraud perpetrated by Lugano's founder and former CEO".
CODI is in active discussions with its senior lender group for a formal forbearance extension to allow additional time to complete the restatement process.

Nov 3, 2025, 9:14 PM

8-K

Compass Diversified Announces Extension for Restated Financial Results

CODI

Financial Restatement

Accounting Changes

Compass Diversified (CODI) has been granted an extension by its senior secured lenders, moving the deadline to publish restated financial results to November 10, 2025.
The restatement pertains to fiscal years ended December 31, 2022, 2023, and 2024.
This action is a result of an investigation into financial and accounting irregularities, including fraud perpetrated by Lugano's founder and former CEO, at CODI's Lugano Holding Inc. subsidiary.
The company emphasizes that the investigation is isolated to Lugano, with other subsidiaries maintaining solid operating performance.

Nov 3, 2025, 9:10 PM

Press Release

Compass Diversified Holdings Enters Forbearance Agreement with Noteholders

CODI

Financial Restatement

Delisting/Listing Issues

Debt Issuance

Compass Diversified Holdings (CODI) entered into a Forbearance Agreement with certain holders of its 2029 and 2032 Notes on August 29, 2025.
This agreement addresses potential defaults arising from CODI's previously disclosed non-reliance on its 2022, 2023, and 2024 financial statements and delayed filing of its Quarterly Report on Form 10-Q for Q1 2025, due to issues at its subsidiary, Lugano Holding, Inc..
The Forbearance Period is set to expire on the earliest of several conditions, including October 24, 2025, providing CODI time to complete the restatement of its financial statements and file its Q1 and Q2 2025 quarterly reports.
As consideration for the forbearance, CODI will pay noteholders an upfront fee (either 1.25% or 1.75% of principal, paid in kind) and additional interest (equivalent to a 5.00% per annum increase, paid in kind, from August 1, 2025) or a cash fee if supplemental indentures are not finalized.