[8-K] Compass Diversified Holdings Reports Material Event

Rhea-AI Filing Summary

Compass Diversified Holdings (CODI) disclosed that it delayed filing its quarterly report and has stated non-reliance on its 2024 financial statements due to identified irregularities in sales, cost of sales, inventory, and accounts receivable at subsidiary Lugano Holding, Inc. The company previously notified its lenders of potential defaults and entered successive forbearance agreements that paused lender remedies while CODI investigates and restates financials.

The most recent agreement (the Third Forbearance Agreement) dated October 10, 2025 extends forbearance through the earliest of certain events or November 24, 2025, requires delivery of restated audited 2024 financials and June 30, 2025 monthly financials by October 24, 2025, and conditions access to revolving credit to a $60,000,000 exposure cap and an acceptable 13-week Forbearance Budget. The agreement allows Restricted Payments only if post-action liquidity is at least $10,000,000. The description here is a summary; the full Third Forbearance Agreement is filed as Exhibit 10.1.

Positive

• Lenders agreed to forbear from exercising remedies through the Forbearance Period ending November 24, 2025
• Access to revolving credit remains subject to a $60,000,000 exposure cap, preserving liquidity options during the forbearance
• Forbearance permits Restricted Payments if post‑action liquidity is at least $10,000,000, allowing limited cash distributions under conditions

Negative

• Non‑reliance on 2024 financial statements due to irregularities at Lugano indicates material accounting control issues
• Potential defaults were notified to the Administrative Agent, creating immediate credit risk absent forbearance
• Restated audited financials and June 30, 2025 financials must be delivered by October 24, 2025, or forbearance may lapse
• Revolving credit constrained to $60,000,000, limiting borrowing flexibility relative to prior capacity

Insights

Credit & Restructuring Analyst

Forbearance buys time but imposes tight deliverables and caps.

The Third Forbearance Agreement halts lender remedies until the earliest of several trigger events or November 24, 2025, subject to the company delivering a lender‑approved 13‑week Forbearance Budget and restated audited 2024 financials by October 24, 2025. Revolving availability is constrained to a $60,000,000 exposure cap and credit extensions carry a specified term SOFR margin.

Key dependencies are timely delivery and lender acceptance of restated statements and the Forbearance Budget; failure to meet these is an immediate default trigger. Monitor delivery of restated financials and any extension approvals from the Administrative Agent over the next 2–6 weeks.

Accounting & Controls Specialist

Non‑reliance and restatement obligations signal material accounting issues at a subsidiary.

CODI disclosed irregularities in sales, cost of sales, inventory, and accounts receivable at Lugano, prompting non‑reliance on the 2024 financials and a requirement to produce restated audited financial statements and June 30, 2025 monthly financials by October 24, 2025. These deliverables are central to lender forbearance.

The primary risk is the scope of required adjustments in the restatement; material changes could affect covenant calculations and credit availability within the Forbearance Period. Expect substantive audit work and potential adjustments over the next 2–8 weeks tied to the restatement timeline.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 10, 2025

COMPASS DIVERSIFIED HOLDINGS

(Exact name of registrant as specified in its charter)

Delaware

001-34927

57-6218917

(State or other jurisdiction of incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

COMPASS GROUP DIVERSIFIED HOLDINGS LLC

(Exact name of registrant as specified in its charter)

Delaware

001-34926

20-3812051

(State or other jurisdiction of incorporation)

(Commission File Number)

(I.R.S. Employer Identification No.)

301 Riverside Avenue, Second Floor, Westport, CT 06880

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (203) 221-1703

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Shares representing beneficial interests in Compass Diversified Holdings

CODI

New York Stock Exchange

Series A Preferred Shares representing beneficial interests in Compass Diversified Holdings

CODI PR A

New York Stock Exchange

Series B Preferred Shares representing beneficial interests in Compass Diversified Holdings

CODI PR B

New York Stock Exchange

Series C Preferred Shares representing beneficial interests in Compass Diversified Holdings

CODI PR C

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Section 1						Registrant's Business and Operations
Item 1.01						Entry into a Material Definitive Agreement

As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on May 7, 2025 (the “Initial Form 8-K”), Compass Group Diversified Holdings LLC (the “Company”) and Compass Diversified Holdings (the “Trust” and, together with the Company, “CODI”) indicated its intent to delay the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 and disclosed non-reliance on its 2024 financial statements as a result of concerns about financing, accounting, and inventory practices at one of its subsidiaries, Lugano Holding, Inc. (“Lugano”), and irregularities identified in sales, cost of sales, inventory, and accounts receivable recorded by Lugano. Concurrently, the Company also provided notice to Bank of America, N.A. (the “Administrative Agent”), in its capacity as Administrative Agent for the Lenders, Swing Line Lender, and L/C Issuer under that certain Third Amended and Restated Credit Agreement, dated as of July 12, 2022 (as amended, modified, extended, restated, replaced, or supplemented in writing from time to time, the “Credit Agreement”), advising of the existence of potential defaults or events of default under the Credit Agreement in respect of the matters disclosed in the Initial Form 8-K (the “Lugano Events of Default”). In connection with the events described in the Initial Form 8-K, and as previously disclosed on a Current Report on Form 8-K filed with the SEC on May 27, 2025 (the “First Forbearance Form 8-K”), the Company entered into a Forbearance Agreement and Second Amendment to Credit Agreement with the Administrative Agent and the lenders party thereto representing at least 50% of the total credit exposure of all lenders under the Credit Agreement, pursuant to which the lenders under the Credit Agreement agreed to refrain from exercising the rights and remedies available to them with respect to the Lugano Events of Default until 11:59 p.m. (Eastern Time) on July 25, 2025, or the earlier occurrence of certain other specified events (the “First Forbearance Agreement”). Additionally, the First Forbearance Agreement provided for certain amendments to the Credit Agreement, as described in the First Forbearance Form 8-K.

Subsequently, as previously disclosed on a Current Report on Form 8-K filed with the SEC on July 28, 2025 (the “Second Forbearance Form 8-K”), the Company entered into a Second Forbearance Agreement and Third Amendment to Credit Agreement with the Administrative Agent and the lenders party thereto representing at least 50% of the total credit exposure of all lenders under the Credit Agreement, pursuant to which the lenders under the Credit Agreement agreed to refrain from exercising the rights and remedies available to them with respect to the Lugano Events of Default until 11:59 p.m. (Eastern Time) on October 24, 2025, or the earlier occurrence of certain other specified events (the “Second Forbearance Agreement”). The Second Forbearance Agreement also provided for certain amendments to the Credit Agreement, as described in the Second Forbearance Form 8-K (the Credit Agreement, as amended by the First Forbearance Agreement and Second Forbearance Agreement, the “Amended Credit Agreement”).

On October 10, 2025, the Company entered into a Third Forbearance Agreement (the “Third Forbearance Agreement”) with the Administrative Agent and the lenders party thereto representing at least 50% of the total credit exposure of all lenders under the Amended Credit Agreement (the “Consenting Lenders”), pursuant to which the Consenting Lenders agreed on behalf of all lenders under the Amended Credit Agreement to refrain from exercising rights and remedies available to them with respect to the Lugano Events of Default until the earliest of: (a) the occurrence of any event of default other than a Lugano Event of Default; (b) the breach by the Company of any covenant or provision of the Third Forbearance Agreement; (c) a declaration by the trustee or any holders of the Company’s 2029 Senior Unsecured Notes of any default or event of default under the Indenture dated as of March 23, 2021 between the Company and U.S. Bank National Association, as trustee, which has not been cured and for which a forbearance agreement has not been executed with the Company within five business days after the date of such declaration; (d) the declaration by the trustee or any holder of the 2032 Senior Unsecured Notes of any default or event of default under the Indenture dated as of November 27, 2021 between the Borrower and U.S. Bank National Association, as trustee, which has not been cured and for which a forbearance agreement has not been executed with the Company within five business days after the date of such declaration; and (e) 11:59 p.m. (Eastern Time) on November 24, 2025 (the period from October 10, 2025 through the earliest of events (a) through (e) above, the “Forbearance Period”). However, with respect to the foregoing clauses (c) and (d), if the Administrative Agent agrees to extend the date on which the restated financial statements are required to be delivered as discussed below, such five-business-day requirement will be extended to 10 days.

Before the Third Forbearance Agreement becomes effective (the “Effective Date”), the Company is required to deliver, among other things, to the Administrative Agent, for distribution to the lenders, a budget of the Company’s projected receipts and disbursements for the 13-week period following the Effective Date (the “Forbearance Budget”) that is acceptable to the Administrative Agent and the lenders representing at least 50% of the total credit exposure of all lenders under the Amended Credit Agreement, which Forbearance Budget may be updated as

requested by the Company if such update is acceptable to the Administrative Agent in its sole discretion. During the Forbearance Period, the Company cannot utilize the proceeds of collateral or loans for any purpose not contemplated under the Forbearance Budget and the Company’s total cash disbursements in any calendar week (excluding disbursements for fees and costs of the Administrative Agent’s financial advisor and counsel) cannot exceed the projected total cash disbursements set forth in the Forbearance Budget for such week by more than $1 million in the aggregate.

The Third Forbearance Agreement provides that the Company may make Restricted Payments (as defined in the Amended Credit Agreement) during the Forbearance Period to the extent such Restricted Payments are set forth in the Forbearance Budget and after giving effect thereto and the incurrence of any indebtedness in connection therewith the sum of (i) all cash of the Company on deposit with the Administrative Agent or subject to a qualifying control account, plus (ii) unused borrowing availability, is not less than $10,000,000; provided, however, that the forgoing is not the exclusive method by which the Company may make Restricted Payments. The Third Forbearance Agreement also requires the Company to deliver (i) the restated audited financials for the fiscal year ended December 31, 2024 and any other fiscal years for which restated financials are prepared, and (ii) the financials for the month ended June 30, 2025, both on or before October 24, 2025, which may be extended by the Administrative Agent for no more than 10 days.

During the Forbearance Period, the lenders under the Amended Credit Agreement, as amended by the Third Forbearance Agreement, will honor requests for credit extensions from the Company for revolving loans composed of term SOFR loans with an applicable rate of 2.50% per annum and an interest period of one month; provided, however, that such credit extensions shall not cause the lenders’ revolving credit exposures (inclusive of letters of credit obligations) to exceed $60 million, without the additional capacity at the discretion of the lenders previously allowed under the Second Forbearance Agreement.

The foregoing description of the Third Forbearance Agreement is a summary only and is qualified in its entirety by reference to the complete text of the Third Forbearance Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Section 8						Other Events
Item 8.01						Other Events

The Company is continuing discussions with the Administrative Agent and the lenders regarding a waiver of, or other relief from, the Lugano Events of Default. The Company expects that the Third Forbearance Agreement will allow these discussions to continue while CODI works to complete the restatement of its financial statements, as disclosed in the Initial Form 8-K, the Form 8-K filed by CODI on June 25, 2025 and CODI’s other filings with the SEC. However, CODI cannot make any assurances regarding the timing of the restatement, the potential need to restate additional periods, or whether the Company will be successful in receiving the requested waivers or other relief or future forbearance. If CODI is not successful in these efforts, it would likely have a material adverse effect on CODI’s business, financial condition, and results of operations.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Current Report on Form 8-K 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 expectations as to the timing and outcome of the Audit Committee’s investigation, the willingness of the Company’s lenders to provide future relief and/or waivers, the timing of filing periodic reports and restatements, 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, CODI’s beliefs and expectations relating to the anticipated financial and other impacts of internal control failures, if any, and the items subject to investigation and restatement review, and the impacts of any material weaknesses identified and CODI’s remediation efforts and efforts to prepare financial statements. 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 the Board of Directors and management, and on information currently available to the 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 (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; the likelihood that the control deficiencies identified or that may be identified in the future will result in material weaknesses in CODI’s internal control over financial reporting; and commercial litigation relating to the CODI’s representations regarding its financial statements and litigation, enforcement actions or investigations relating to CODI’s internal controls, restatement reviews, the investigation described in this Current Report, 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 Current Report on Form 8-K, or to reflect the occurrence of unanticipated events.

Section 9     Financial Statements and Exhibits

Item 9.01    Financial Statements and Exhibits

(d)    Exhibits.

Exhibit Number						Description
10.1						Third Forbearance Agreement, dated October 10, 2025, by and among Compass Group Diversified Holdings LLC, the Lenders party thereto, and Bank of America, N.A., in its capacity as Administrative Agent for the Lenders, Swing Line Lender and L/C Issuer
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 10, 2025			COMPASS DIVERSIFIED HOLDINGS
			By:						/s/ Stephen Keller
									Stephen Keller
									Regular Trustee

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 10, 2025			COMPASS GROUP DIVERSIFIED HOLDINGS LLC
			By:						/s/ Stephen Keller
									Stephen Keller
									Chief Financial Officer

FAQ

What did CODI disclose in the 8‑K about Lugano and the 2024 financials?

CODI stated it has non‑reliance on its 2024 financial statements because of identified irregularities in sales, cost of sales, inventory, and accounts receivable at subsidiary Lugano Holding, Inc.

How long does the Third Forbearance Agreement for CODI run?

The Third Forbearance Agreement pauses lender remedies until the earliest of certain trigger events or November 24, 2025, subject to specific conditions and earlier cure events.

What financial deliverables must CODI provide to lenders and by when?

CODI must deliver restated audited financials for fiscal year 2024 and financials for the month ended June 30, 2025 on or before October 24, 2025, with a possible 10-day extension at the Administrative Agent's discretion.

What are the borrowing limits under the forbearance?

During the Forbearance Period, lenders will honor revolving credit requests provided total lender revolving exposures (including letters of credit) do not exceed $60,000,000 without additional lender consent.

Are Restricted Payments allowed under the Third Forbearance Agreement?

Yes, but only if such Restricted Payments are included in the approved Forbearance Budget and after the company’s cash on deposit plus unused borrowing availability is not less than $10,000,000.

What could cause the forbearance to end early?

Forbearance ends early on events such as a default other than the Lugano Events, breach of the Third Forbearance Agreement covenants, or uncured defaults under the 2029 or 2032 Senior Unsecured Notes indentures as specified.