Lugano Diamonds entered 2026 with new ownership in hopes to return to business as normal.
The troubled jeweler, once considered a star performer of previous parent company Compass Diversified, on Nov. 16 voluntarily filed for Chapter 11 relief in the U.S. Bankruptcy Court for the District of Delaware to commence the sale process for all its assets.
At the time, Lugano reached an agreement with investment firm Enhanced Retail Funding (ERF) to “support the smooth continuation of retail sales and operations through the court-supervised sale process,” Lugano said in a statement.
The proposed transaction was subject to other offers with Enhanced Retail setting the minimum bid, also known as the stalking horse.
In the final days of 2025, Enhanced Retail Funding became the winning bidder.
Lugano eventually cancelled the auction and designated Enhanced Retailing Funding LLC as “the successful bidder,” according to a Dec. 20 filing. Lugano’s notice said that ERF “was the only qualified bidder who submitted” by the deadline.
The court approved the sale process on Dec. 31 and confirmed that Enhanced Retail Funding represented “the highest and otherwise best offer.”
The filing also stated that no other bidder offered to purchase Lugano “for greater economic value.”
Enhanced will move forward as the new owners of Lugano and its assets in when the transaction closes. The firm has also been granted temporary use of Lugano’s intellectual property (IP) and media sites to promote the sale.
The filing gave no update on the status of Lugano’s boutique locations. The jeweler currently counts seven stores in the U.S. with the latest opening in Chicago last year.
Interim Chief Executive Josh Gaynor, who initially joined as president in 2024, told the Business Journal that he plans to stay at Lugano.
Company Helper
The Dec. 31 filing stated that the sale to Enhanced Retail Funding “must be permitted to maximize the value” that both the firm and Lugano may realize from the transaction.
Enhanced Retail Funding is an affiliate of Boston-based Gordon Brothers, a firm founded in 1903 that handles asset services, lending, financing and trading for clients in retail, commercial, industrial, brands and real estate. The company works closely with businesses on operational challenges and complications such as brick-and-mortar expansion, liquidity, bankruptcy and restructuring.
Clients have included Taco Bell owner Yum! Brands Inc., Brooks Brothers, Polaroid and American Apparel.
Gordon Brothers said it helped Polaroid “find new life” after acquiring the brand’s intellectual property out of bankruptcy as part of a joint venture in 2008. After completing a turnaround, the firm sold the brand in 2017.
It “invested in a strong brand despite challenges and transformed the film and camera company into a thriving licensing business,” according to the Gordon website.
Investigation Update
Bloomberg reported in December that the FBI is now involved in the Lugano investigations.
Last June, Lugano officially filed a complaint in the Superior Court of Orange County, accusing its founder and former chief executive Moti Ferder of fraud, including leaving the company exposed to more than $100 million in liabilities.
Ferder, who is living out of the country, has denied the allegations made against him by the company he founded, according to his lawyer, Jeffrey Reeves of Reeves & Weiss LLP.
“The legal proceedings will provide a forum for Mr. Ferder to correct the record regarding certain inaccurate statements made about him,” Reeves previously told the Business Journal. “Mr. Ferder is confident that the judicial process will bring the full truth to light and that he will be vindicated.”
Federal authorities have been interviewing individuals involved with the transactions in question, and a Lugano spokesperson told Bloomberg that the jeweler is cooperating.
The alleged fraud caused Compass to reduce its income from continuing operations by $600 million for 2023 and 2024, according to restatements that the parent company issued in December.
Compass is scheduled to release its third quarter results on Jan. 14.
