Lugano Diamonds & Jewelry Inc.

Representation of the creditors’ committee in the Delaware chapter 11 cases of Lugano Diamonds and its debtor affiliates, a Newport Beach, California-based designer, manufacturer, and retailer of high-end jewelry. Lugano’s business experienced a sudden, catastrophic downturn with the discovery, in summer 1995, of considerable evidence that Lugano’s founder and CEO had engaged in years-long, widespread fraud concerning the sale of fractional interests in loose diamonds and serious irregularities in Lugano’s books. Creditors claiming to be victims of this alleged fraud have filed claims exceeding $300M against alleged secured debt—held by Lugano’s ultimate parent, private equity firm Compass Diversified Holdings—of nearly $800M. The firm is helping the committee perform an extensive investigation into the alleged fraud to substantiate claims against several major parties that, if successful, could enhance unsecured creditors’ recovery through Lugano’s sale and plan of liquidation process.