Lugano Diamonds & Jewelry, Inc. recently moved to a bankruptcy court in Delaware. The Newport Beach-based jeweler filed to restructure its business and pursue a value-maximizing sale of its assets. The luxury jewelry brand stated that operations will continue during the proceedings.
Financial Restructuring: Lugano Diamonds Enters Chapter 11
According to Businesswire, Lugano Diamonds & Jewelry, Inc. and several affiliates have filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware for the latest filing. Through Section 363 of the U.S. Bankruptcy Code, the luxury jeweler is seeking approval to launch a value-maximizing sale process for its assets.
Lugano Diamonds & Jewelry, Inc. has reached a deal with Enhanced Retail Funding to facilitate the bankruptcy procedures. The investment firm, which brings more than 100 years of combined experience in the jewelry sector, will help guide the process.
The filing adds that, based on the proposed terms, Enhanced Retail Funding is set to begin working with Lugano Diamonds & Jewelry, Inc. immediately and support its retail sales and operations through the court-supervised sale process. Additionally, the investment firm will act as the stalking horse bidder in the case.
The proposed transaction by Lugano Diamonds & Jewelry, Inc. is contingent upon higher and better offers, along with more customary conditions. The California-based jeweler is looking for additional qualified bidders as well. If additional qualified bids come in, the jeweler may hold a court-supervised auction, using the stalking horse bid as the starting point.
The jeweler has filed several standard first-day motions to ensure a smooth transition into Chapter 11. These include payment of employee wages, post-petition obligations to vendors/partners, and maintenance of customer programs.
Keller Benvenutti Kim LLP and Young Conaway Stargatt & Taylor, LLP are the legal advisors of Lugano Diamonds & Jewelry, Inc. in the latest case. Armory Securities, LLC, is acting as the investment banker of the jeweler. J. Michael Issa from GlassRatner is the Chief Restructuring Officer in the Chapter 11 bankruptcy.
Lugano Diamonds & Jewelry, Inc.’s strategic communications advisor is C Street Advisory Group. The legal counsel to the Special Committee of the California-based jeweler’s Board of Directors is Barnes & Thornburg LLP.
Operational Continuity During Bankruptcy
As Lugano Diamonds & Jewelry, Inc. works to maintain operations through the bankruptcy, it has submitted a motion to request a $12 million debtor-in-possession financing facility. According to Businesswire, this could offer the California jeweler nearly $10 million in new liquidity.
Once the Delaware bankruptcy court approves the same, Lugano Diamonds & Jewelry, Inc. is expected to use the DIP financing along with cash on hand and operating cash flows.
The Newport Beach jeweler was founded in 2005. The company has expanded its collection to include rings, necklaces, bracelets, and other fine jewelry. The jeweler also offers curated collections for brides, men, and special occasions.
Currently, the luxury jeweler has its boutiques in Newport Beach, Palm Beach, Aspen, Houston, Greenwich, Ocala, Chicago, and Washington, D.C.
As the Chapter 11 process advances and new bids are evaluated, the coming months will be crucial in the ownership and further direction of Lugano Diamonds & Jewelry, Inc.
