Compass Diversified Announces Update on Lugano Subsidiary

Rhea-AI Summary

Compass Diversified (NYSE: CODI) announced that its subsidiary Lugano Holding, Inc. filed for Chapter 11 under direction of an independent special committee to maximize stakeholder value.

CODI, as Lugano’s senior secured lender, agreed to provide debtor-in-possession (DIP) financing. As a result of the filing, Lugano will no longer be consolidated with CODI’s financial results beginning in the fourth quarter of 2025. CODI said its other eight subsidiaries continue to generate strong cash flow.

CODI is finalizing a financial restatement and working with lenders and bondholders to maintain flexibility while completing required SEC filings.

Positive

• CODI agreed to provide DIP financing to Lugano
• Other eight subsidiaries continue generating strong cash flow
• Chapter 11 provides an orderly process to resolve Lugano matters

Negative

• Lugano filed for Chapter 11 bankruptcy
• Lugano will be deconsolidated from CODI starting Q4 2025
• CODI is completing a financial restatement and delinquent SEC filings

Insights

Distressed-asset analyst

CODI’s Lugano subsidiary filed Chapter 11; the move isolates the problem but raises near-term financial and reporting risk for CODI.

The Chapter 11 filing by Lugano Holding, Inc. creates an orderly legal process to resolve that subsidiary’s claims while CODI provides debtor-in-possession financing and removes Lugano from consolidation beginning in Q4 2025. This isolates Lugano’s assets and liabilities from CODI’s reported results, which simplifies CODI’s ongoing financial restatement work but reduces consolidated asset and income recognition for the impacted period.

The outcome depends on the bankruptcy process, the scope of the Lugano investigation, and the restatement timeline. CODI disclosed risks including potential additional misstatements, audit conclusions, and lender cooperation. These items create material near-term uncertainty about CODI’s financial statements and regulatory compliance.

Watch for three concrete, monitorable milestones over the coming months: the bankruptcy plan and creditor recoveries in the Lugano Chapter 11 process, the timing and conclusions of the independent audit and restatement, and any NYSE compliance developments; expect these to unfold through Q4 2025 and into the next reporting cycle.

WESTPORT, Conn., Nov. 16, 2025 (GLOBE NEWSWIRE) -- Compass Diversified (NYSE: CODI) (“CODI”) today announced that its subsidiary, Lugano Holding, Inc. (“Lugano”), has filed for Chapter 11 protection under the U.S. Bankruptcy Code. The 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 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.”

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation, CODI’s expectations as to the timing and outcome of the Lugano investigation, CODI’s expectations with respect to the timing of its restatement and delivery of delinquent financial statements, CODI’s expectations regarding the timing and outcome of the Lugano bankruptcy process, CODI’s credit availability and future liquidity as well as CODI’s expectations regarding the future cooperation of its lenders, actions taken in response to the outcome of the investigation, the future performance of Lugano and CODI’s other subsidiaries, the filing or delay of CODI’s periodic reports, and the amount of any potential misstatements associated with Lugano and the impact any such misstatements may have on CODI’s previously issued financial statements or results of operations. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believe,” “expect,” “may,” “could,” “would,” “plan,” “intend,” “estimate,” “predict,” “potential,” “continue,” “should” or “anticipate” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. These statements are based on beliefs and assumptions by CODI’s Board of Directors and management, and on information currently available to CODI’s Board of Directors and management. These statements involve risk and uncertainties that could cause CODI’s actual results and outcomes to differ, perhaps materially, including but not limited to: the discovery of additional information relevant to the investigation; the conclusions of the Audit Committee of CODI’s Board of Directors (and timing of those conclusions) concerning matters relating to the investigation; the timing of the review by, and the conclusions of, CODI’s independent registered public accounting firm regarding the investigation and CODI’s financial statements; a further material delay in CODI’s financial reporting or ability to hold an annual meeting of stockholders; the impacts of restatement reviews and the potential need to restate additional periods; CODI’s ability to regain compliance with NYSE continued listing requirements; the cooperation of, and future concessions granted by, CODI’s lenders; control deficiencies identified or that may be identified in the future that will result in material weaknesses in CODI’s internal control over financial reporting; and litigation relating to the investigation, including CODI’s representations regarding its financial statements, and current and future litigation, enforcement actions or investigations relating to CODI’s internal controls, restatement reviews, the Lugano Investigation, or related matters. Please see CODI’s Annual Report on Form 10-K for the year ended December 31, 2024 for other risk factors that you should consider in connection with such forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date such statements have been made. Except as required by law, CODI does not undertake any public obligation to update any forward-looking statements to reflect events, circumstances, or new information after the date of this press release, or to reflect the occurrence of unanticipated events.

Investor Relations
Compass Diversified
irinquiry@compassdiversified.com

FAQ

What did Compass Diversified (CODI) announce about Lugano on November 17, 2025?

CODI announced that Lugano Holding filed for Chapter 11 and CODI will provide DIP financing.

How will the Lugano Chapter 11 filing affect CODI’s financial statements for Q4 2025?

CODI said Lugano will no longer be consolidated with CODI’s financial results beginning in Q4 2025.

Is CODI providing financing to Lugano after the bankruptcy filing?

Yes. CODI, as Lugano’s senior secured lender, agreed to provide debtor-in-possession financing.

Do CODI’s other subsidiaries remain operational after Lugano’s filing?

Yes. CODI stated its other eight subsidiaries continue to generate strong cash flow and perform well.

Will Lugano’s Chapter 11 filing impact CODI’s SEC reporting or listings?

CODI is finalizing a financial restatement and working with lenders; it warned of risks including NYSE compliance and timing of SEC filings.