Lugano Diamonds & Jewelry - Chapter 11 Plan Terms

Plan / RSA Terms

Overview

• The court confirmed the second amended Chapter 11 plan of liquidation of Lugano Diamonds & Jewelry Inc. and its affiliated debtors on Sept. 24, 2026, following confirmation hearings held Aug. 31 and Sept. 17, 2026, and approved the disclosure statement on a final basis; the court also approved the plan modifications reflected in Exhibit A to the confirmation order, finding them non-material, not adverse to any party in interest, and not requiring re-solicitation under Bankruptcy Rule 3019.
• The economic core of the plan is a settlement with the debtors' secured lender and majority owner, Compass Group Diversified Holdings LLC, which together with Compass Diversified Holdings, Compass Group Management LLC and Sostratus, LLC comprise the CODI parties. The Settlement Agreement and Mutual Release dated June 23, 2026 resolves the estates' claims against the lender and the lender's claims against the estates, and converts the lender's more than $718 million secured claim into a percentage-sharing arrangement across every category of liquidation recovery.
• A plan support agreement among the CODI parties, the debtors and the creditors' committee obligated the debtors to propose a plan consistent with all material terms of the settlement, and obligated the parties to vote to accept the plan and support its confirmation.
• Implementation runs through a Delaware statutory liquidation trust, the Lugano Liquidation Trust, which takes the estates' assets and causes of action, issues beneficial interests to the lender and to general unsecured creditors, and makes all distributions. All debtors other than Lugano Holding, Inc., which continues as the post-confirmation debtor solely to monetize the tax refund and wind up corporate existences, dissolve automatically on the effective date, and all existing equity interests are cancelled.
• On the effective date the debtors' existing directors, officers and managers are terminated and the special committee is disbanded, with those individuals keeping only confidentiality obligations and the right to file claims, and the creditors' committee dissolves.

Background

• Mordechai Haim Ferder and Idit Ferder founded the business in 2004 as a designer, manufacturer and retailer of high-end jewelry. In 2021 the lender acquired an indirect majority interest in Lugano Diamonds & Jewelry Inc. from Ferder and his affiliated entities, becoming majority equity holder of Lugano Holding, Inc., while Ferder and his affiliated entities acquired a significant portion of Lugano Holding, Inc.'s equity; Ferder continued as chief executive officer and a director of certain debtors.
• Lugano Diamonds & Jewelry Inc. and Lugano Buyer, Inc. borrowed under a Sept. 3, 2021 credit agreement with the lender, guaranteed by the other debtors and secured under a contemporaneous guarantee and collateral agreement by liens on substantially all of the debtors' personal property. Outstanding principal, prepetition interest and fees exceed $718 million.
• On May 7, 2025 the lender and its parent disclosed in a Form 8-K that the lender had commenced an internal investigation into the financing, accounting and inventory practices of Lugano Holding, Inc. based on concerns reported to its management, and that Ferder had resigned as chief executive officer of Lugano Holding, Inc. and from all offices and directorships with the applicable debtors and their subsidiaries and affiliates. On June 24, 2025, Lugano Diamonds & Jewelry, Inc. sued Ferder and a related trust of which he is a trustee for fraud, concealment, constructive fraud and breach of fiduciary duty.
• Thomas FitzGerald and L. Spencer Wells joined the Lugano board on July 9, 2025, and a week later, on July 16, 2025, the board delegated authority to investigate, bring and resolve potential claims to a newly formed special committee composed of the two of them. The special committee retained independent advisors, opened its own investigation into the fraud allegations, and authorized the Chapter 11 filings together with the debtors' boards and managers.
• The debtors filed on Nov. 16, 2025 in the District of Delaware. The U.S. Trustee appointed the creditors' committee on Nov. 25, 2025, with amended notices of appointment filed Nov. 26, 2025 and June 24, 2026. The committee, working with the special committee on the debtors' behalf, investigated the fraud allegations and the extent and validity of the lender's liens and claims.
• The lender filed a secured claim on Jan. 27, 2026, proof of claim no. 153 in the amount of $718.2 million, withdrawing two proofs of claim filed Jan. 19, 2026, and separately asserted postpetition claims for interim financing and adequate protection under the DIP order and the cash collateral order. The debtors, through the special committee, the lender and the committee then agreed to non-binding mediation, held May 6 and 7, 2026, which produced the agreement in principle memorialized in the settlement agreement.

Voting and Confirmation Posture

• Classes 3, 4 and 5 each voted to accept the plan; Classes 4 and 5 accepted without counting any insider acceptances, satisfying section 1129(a)(10). Classes 1 and 2 are unimpaired and conclusively presumed to accept, while Classes 6, 7 and 8 are deemed to reject, and the court confirmed the plan over those classes under section 1129(b), finding no holder of a junior claim or interest receives or retains property on account of it.
• All remaining unresolved objections, statements, informal objections and reservations of rights were overruled on the merits, with prejudice, and the record of the confirmation hearing is closed.

CODI Settlement Economics

• In full and final satisfaction of the CODI claim, which includes the cash collateral claim, the DIP claims, the secured claim, any other claim under the 2021 credit agreement, claims for diminution in value and the Bank of America claim to which the lender is subrogated, the lender receives the special beneficial interest in the liquidation trust. That interest carries a fixed percentage of each recovery bucket:
  • 34.79% of effective date cash, distributed on the effective date.
  • 34.79% of cash released from the effective date reserves and the professional fee reserve, to the extent not needed to satisfy allowed administrative, professional fee, priority, priority tax, other secured and convenience claims.
  • 34.79% of all net proceeds of specified assets received by the trust after the effective date. Specified assets are the agency agreement proceeds, the tax refund, the theft policy, and causes of action to establish and realize on amounts due the estates with respect to them.
  • 45% of net proceeds of all claims against Grant Thornton LLP and its affiliates, which served as auditor to both the debtors and the lender.
  • 25% of net proceeds of all other causes of action, including recoveries under any representations and warranty policy and avoidance actions, other than the auditor claims and specified assets.
  • All net proceeds remaining in the trust after holders of general beneficial interests are paid the full amount of their allowed general unsecured claims plus interest at the federal judgment rate.
• The DIP claims receive no separate distribution and are deemed satisfied by the Class 3 treatment. The DIP lender is the same entity as the prepetition lender, funding under a Nov. 18, 2025 superpriority secured debtor-in-possession credit agreement approved by the interim DIP order entered Nov. 19, 2025; the court entered a final cash collateral order on Feb. 10, 2026.
• Effective date cash is all estate cash on the effective date less the effective date reserves and less the lesser of actual professional fees incurred between the petition date and the effective date and the agreed pre-effective date fee budget. That budget, agreed among the lender, the debtors, the special committee and the committee, allocates $1,571,765 to the debtors' and special committee's professionals and $955,000 to committee professionals, for a total of $2,526,765, and caps only the amount deductible from effective date cash in computing the lender's effective date distribution rather than the professional fees allowable for the period. The trust agreement instead measures the initial distribution as 34.79% of the cash in a segregated specified asset account funded with effective date agency agreement cash net of the fee budget, reserves and trust expense reserve, and omits the professional fee reserve from the subsequent-distribution base; the plan controls over the trust agreement.
• The lender irrevocably assigns and transfers its auditor claims to the liquidation trust, deemed contributed as of the later of Sept. 15, 2026 and the effective date. The liquidation trustee must have its professionals maintain a separate billing designation for all work associated with the auditor recovery.
• The settlement requires that the enhanced recovery offered to general unsecured creditors who assign their own claims against Grant Thornton to the trust not affect the treatment of the lender's claims, reduce its recoveries, or have any material adverse effect on the CODI parties or their related parties.
• All settlement payments to the lender are made by wire or similar transfer of immediately available funds per written directions the lender provides to the debtors or the trustee.
• The settlement becomes effective and binding at 12:00 a.m. (prevailing Eastern time) on the date all of its conditions are satisfied or waived: approval and execution by the requisite board majorities of Compass Diversified Holdings, Compass Group Diversified Holdings LLC, Compass Group Management LLC and Sostratus; execution and delivery of counterpart signature pages to the settlement and the plan support agreement; and occurrence of the plan effective date, which had not occurred when the confirmation order was entered. Until then the settlement is not binding and is not an admission of fact or liability; the parties' signature pages are dated June 22 through 24, 2026.
• The court approved the settlement, effective as of the effective date, finding it a fair, equitable and reasonable resolution of the reciprocal claims between the estates and the lender and a sound exercise of the debtors' business judgment.

Treatment of Claims and Interests

• Administrative claims, professional fee claims, priority tax claims and DIP claims are unclassified; the plan designates eight classes.
• Allowed administrative claims receive cash from the trust equal to the unpaid amount; allowed professional fee and ordinary course professional fee claims are paid from the professional fee reserve or trust assets within five business days after a final order approving them; and allowed priority tax claims are paid, at the trustee's option, in cash on the later of the effective date and 30 days after allowance, in regular cash installments over no more than five years after the petition date with interest at the applicable nonbankruptcy rate, or as agreed.
• An allowed general unsecured claim that is insured is allowed only to the extent of its uninsured portion, and no allowed claim may recover more than 100% of its amount except for interest the plan provides.
• Class 1, other secured claims (unimpaired, conclusively presumed to accept): at the trustee's option, cash equal to the allowed amount, return of the collateral without representation or warranty and without recourse, or such other treatment as renders the claim unimpaired. Each allowed other secured claim sits in its own subclass for voting purposes unless it shares a lien with another holder.
• Class 2, priority claims (unimpaired, conclusively presumed to accept): cash from the trust equal to the unpaid allowed amount.
• Class 3, the CODI claim (impaired, voted to accept): allowed as of the effective date and satisfied by the special beneficial interest in the liquidation trust carrying the percentage recoveries set out above. All cash net of the effective date reserves and professional fee reserve not used for special beneficial interest distributions becomes liquidation trust available cash.
• Class 4, general unsecured claims (impaired, voted to accept): a pro rata share of the general beneficial interests in the liquidation trust, plus interest at the federal judgment rate to the extent of available cash if distributions reach the full allowed claim amount.
  • A creditor that contributes its own causes of action against the auditor to the trust, and executes the documents the trustee reasonably requests, receives an additional distribution equal to its pro rata portion of 10% of the net proceeds of all auditor causes of action net of the lender's 45% share, capped at the amount of its allowed general unsecured claim. The enhancement requires the creditor to certify on its ballot or contribution form under penalty of perjury that the contributed claim is colorable and supportable by evidence, and the trustee, in consultation with the oversight board, to independently and reasonably confirm the same.
  • The plan illustrates the waterfall on $1 million of auditor net proceeds: $450,000 to the lender, $55,000 shared pro rata among contributing creditors, and $495,000 to the trust as available cash.
  • The court overruled any objection that the contribution mechanism discriminates improperly among creditors, finding it consistent with section 1123(a)(4).
• Class 5, convenience class claims (impaired, voted to accept): cash equal to 50% of the allowed claim. Convenience class claims are general unsecured claims of $10,000 or less, or reduced to $10,000 by election on the ballot.
• Class 6, intercompany claims (impaired, deemed to reject): no property or interest in property; intercompany claims are eliminated and extinguished through substantive consolidation.
• Class 7, subordinated claims (impaired, deemed to reject): no property or interest in property. Subordinated claims are non-compensatory penalty claims and claims subordinated to general unsecured claims under section 510, by final order or by the holder's consent; the definition does not reach SEC claims absent SEC agreement or a separate court determination.
• Class 8, equity interests (impaired, deemed to reject): all equity interests cancelled on the effective date, with no property or interest retained.

Liquidation Trust

• The court approved the liquidation trust agreement, the appointment of Michael Goldberg as liquidation trustee, and the appointment of the oversight board. The trust is created as a Delaware statutory trust named the Lugano Liquidation Trust, established to monetize all trust assets and distribute the proceeds to beneficiaries in accordance with Treasury Regulation section 301.7701-4(d), with no objective to continue or engage in a trade or business.
• Trust assets comprise all estate assets, including all causes of action, cash remaining after required effective date payments, the equity in the post-confirmation debtor, and any tax refund proceeds transferred to the trust, but exclude the tax refund itself, the effective date reserves and the professional fee reserve. Vesting occurs automatically on the effective date, free and clear of all claims, liens and interests; where a debtor cannot transfer an asset, the post-confirmation debtor holds it and its proceeds in trust for the liquidation trust.
• The trustee is the exclusive trustee of the trust assets for purposes of 31 U.S.C. § 3713(b) and 26 U.S.C. § 6012(b)(3) and the estate representative under section 1123(b)(3) for all trust assets; the post-confirmation debtor is the estate representative for the tax refund and holds its rights in the refund in trust for the liquidation trust. From and after the effective date the trustee is the post-confirmation debtor's sole board member and officer; the trust agreement's tax provision instead names the trustee its chief executive officer and plan administrator with the oversight board as its board, and the plan controls.
• The trust issues two series of interests, the special beneficial interest held by the lender and the general beneficial interests held by general unsecured creditors, uncertificated and recorded on the trust's books, which recording alone entitles a holder to distribution. To the extent the interests are deemed securities, their issuance is exempt from registration under section 1145. Under the trust agreement the interests may not be sold, transferred, assigned or pledged without the trustee's written consent except by operation of law, and under the plan the claims register closes on the distribution record date (the later of the confirmation date and a date no later than the effective date set by the trust agreement), after which the trustee need not recognize claim transfers.
• A five-member oversight board supervises the trustee: Stephen Keller, Adam Rothstein, Avi Wazana, Spencer Wells and Craig Barbarosh, with Wells and Barbarosh serving as the independent members. Wells also sits on the debtors' special committee and is a released and exculpated party under the plan; Keller signed the settlement agreement for Compass Diversified Holdings, as regular trustee, and for Compass Group Diversified Holdings LLC, as chief financial officer, and Rothstein signed it as chair of the creditors' committee.
• Under the trust agreement, the trustee needs the oversight board's majority consent to, among other things, pursue any cause of action or claim objection worth more than $250,000, monetize any trust asset valued above $250,000, engage advisors other than those expected to cost less than $150,000, borrow (including through litigation financing), change the trustee's compensation, act with respect to the post-confirmation debtor, or resolve the tax refund. Disputed claims asserted below $250,000 may be settled without board approval, claims of $250,000 to under $1.5 million on five business days' negative notice, and claims of $1.5 million or more only with board approval.
• The lender holds specific governance rights in the trust: its designated board member can be removed only by court order and the lender fills that seat's vacancy; the lender must approve any successor independent member, with approval not to be unreasonably withheld; the initial trust expense reserve requires approval by the lender and a board majority; independent members' compensation is agreed by the committee and the lender, and other members are uncompensated; and the lender may receive the trustee's unredacted quarterly reports through its designee. Only the independent members and the trustee may vote on causes of action relating to a potential Ponzi scheme or other fraud in respect of investment contracts, and members who served on or advised the committee are conflicted on claims involving former committee members.
• The trust terminates on the fifth anniversary of the effective date unless the court approves a fixed-period extension on a motion made in the preceding six months, and the board may remove the trustee by majority vote immediately for cause or on 60 days' notice without cause. The trust agreement may be amended by the trustee with board-majority consent only to correct or clarify non-material provisions, and otherwise only with unanimous board approval, the trustee's signature and court approval after notice and a hearing.
• The trustee must determine the fair market value of the trust assets as of the effective date and notify beneficiaries of that valuation, which all parties must use consistently for income tax purposes.
• Where the plan and the trust agreement are inconsistent, the plan controls.

Reserves and Distributions

• On the effective date the trustee must create and maintain the effective date reserves, the professional fee reserve and the liquidation trust expense reserve. A reserve may be used only for the distributions for which it was established, and any cash ultimately not needed becomes liquidation trust available cash.
• The professional fee reserve must be fully funded on the effective date in an amount equal to the professionals' and ordinary course professionals' estimates of unpaid fee claims as of that date, incorporating any cash already set aside under the cash collateral order.
• The effective date reserves cover estimated allowed administrative claims other than professional fee claims, priority claims, priority tax claims, other secured claims and convenience claims. The initial amount is subject to the lender's approval in all respects and must be agreed among the committee, the debtors and the lender and set forth in the plan supplement, which the debtors filed on Aug. 11 and Sept. 16, 2026.
• The trustee makes all distributions to holders of allowed claims and serves as the estates' disbursing agent for distributions from the effective date reserves; distributions to trust beneficiaries are governed by the trust agreement. The court approved the plan's distribution and disputed-claim resolution procedures in their entirety.
• Under the plan, distributions that may come due on disputed claims are held in a disputed claims reserve treated as a disputed ownership fund; distributions under $10 are not made; checks uncashed within 180 days are void; and undeliverable distributions unclaimed for 180 days are forfeited to the trust. The trust agreement requires distributions at least annually. The plan forfeits the distributions of holders that fail to return tax forms within 180 days of a request; the trust agreement states 30 days, and the plan controls.
• Claim objections are due by the latest of 90 days after the effective date, 45 days after the claim is filed, or a date agreed with the trustee or fixed by the court, and the deadline may be extended.
• From and after the effective date the trust has exclusive authority to compromise, resolve and allow any disputed claim without Bankruptcy Court approval, and any agreement it enters on allowance is conclusive and final. Until the effective date the debtors retain the right to compromise and settle claims and estate causes of action subject to court approval.
• The court found the plan feasible: the assets vesting in the trust will suffice for the trustee to perform its duties and for the post-confirmation debtor to carry out its functions and satisfy post-effective date obligations, and because the plan liquidates and dissolves the debtors, confirmation is not likely to be followed by further reorganization.

Conditions to Effectiveness

• The effective date is the first business day after entry of the confirmation order on which no stay is in effect, all Article IX conditions are satisfied or waived, and the debtors, in consultation with the CODI parties and the committee, declare the plan effective. The Article IX conditions are entry of the confirmation order; the order not being subject to any stay; receipt of all governmental and material third-party approvals and consents; execution and delivery of all documents necessary to implement the plan, including the trust agreement; and funding of the reserves in the amounts set forth in the plan supplement.
• The approvals-and-consents and implementing-documents conditions may be waived only in a joint writing by the debtors, the committee and the lender. On the effective date the plan is deemed substantially consummated within the meaning of section 1101 pursuant to section 1127(b).
• If the conditions cannot be satisfied and are not waived, then on the debtors' filed notice the confirmation order is vacated, no distributions are made, the debtors, the estates and all creditors are restored to the status quo immediately before entry of the confirmation order, and no claims or causes of action are waived or released.
• Now that the plan is confirmed, the debtors may, before the effective date, seek court relief under section 1127(b) to remedy defects or reconcile inconsistencies in the plan, the disclosure statement, the confirmation order or the trust agreement so long as holders' treatment is not adversely affected, and the confirmation order provides that no plan provision may be deleted or modified without the debtors' consent. Before confirmation, plan modifications required the consent of the committee and the lender, and the confirmation order itself had to be acceptable to the CODI parties and the committee in all respects; the settlement agreement may be modified only in a writing signed by every party.

Substantive Consolidation

• The plan substantively consolidates all debtors' estates into a single consolidated estate for all purposes under the plan and the trust agreement, including claim allowance, distributions and voting, under section 1123(a)(5)(C) and the court's equitable powers under section 105(a). On the effective date the assets and liabilities merge; intercompany guarantees are eliminated so that any claim and any guaranty of it constitutes one obligation of the consolidated estate; each claim filed against any debtor is treated as one claim against the consolidated estate; all intercompany claims are extinguished without distribution; and the debtors are treated as one entity for setoff availability under section 553. Post-effective date U.S. Trustee fees are nonetheless calculated on a separate legal entity basis for each post-effective date debtor until that debtor's case closes.
• The Ferder claimants were the only parties to object to substantive consolidation. The court found them not adversely affected, noting that virtually all claims are against Lugano Diamonds & Jewelry Inc., which holds substantially all of the debtors' collective assets; that the lender's claims and liens were asserted against all debtors jointly and severally and the lender consents to consolidation under the settlement; that the additional cost of allocating remaining assets and liabilities among the estates means no creditor recovers less as a result; and that Lugano Holding, Inc. is insolvent, so absent consolidation no distribution would reach its equity interests. Consolidation does not affect subordination provisions or the trust's ability to seek subordination of any claim or interest.

Releases

• Debtor releases: effective on the effective date, each released party is released by the debtors and their estates from all claims and causes of action arising from the debtors, their capital structure, management, ownership or operation, the restructuring efforts, avoidance actions, intercompany transactions, the Chapter 11 cases, and the negotiation and implementation of the disclosure statement, the DIP and cash collateral orders, the plan and plan supplement, the trust agreement, the plan support agreement and the settlement agreement, through the effective date. The carve-out for acts determined by final order to constitute actual fraud, willful misconduct or gross negligence does not apply to the CODI parties as to claims within the scope of those settled by the settlement agreement. The court found the debtor release appropriate under the business judgment standard and, to the extent applicable, satisfying the Zenith factors, and held it is not a third-party release so consent is not required.
• Third-party releases: each releasing party releases each released party from the same categories of claims, subject to the same fraud, willful misconduct and gross negligence carve-out but without the debtor release's proviso excluding the CODI parties from it, unless the holder makes an opt-out election by checking the opt-out box on its ballot or submitting an opt-out form. An opt-out removes the holder only from this release; it remains bound by the plan's other releases, exculpation and injunction. The court found the third-party release consensual and integral to the plan, provided after due notice and an opportunity for hearing, and noted the release provisions appeared in boldface in the plan, disclosure statement, ballots, notice of non-voting status and confirmation hearing notice. Holders asserting claims solely in Classes 6 and 7 and holders of equity interests are not bound.
• Released parties are: the debtors, the estates, their subsidiaries, their retained and ordinary course professionals, and directors and officers Frederic Cumenal, David Arnold, L. Spencer Wells and Thomas FitzGerald (each including in their special committee capacities), Stuart Winston, Lisa Calvert and Christoph Pachler; the creditors' committee and its members solely in that capacity, together with their retained professionals, agents and representatives in that capacity; and the CODI parties and their related parties, which the settlement agreement specifies include Patrick A Maciariello and Raj U. Dalal. No excluded party is a released party, and any person who is both is only an excluded party.
• Releasing parties are the debtors and estates; Wells and FitzGerald individually; any successor or estate representative under section 1123(b)(3), including the liquidation trust; all holders of claims other than holders in Classes 6 and 7 only, who do not opt out; each released party; and each related party of the foregoing solely to the extent it may assert claims derivatively through them. An entity that opts out is not a releasing party, and no excluded party is a releasing party.
• Excluded parties are the Ferder affiliated parties, meaning Mordechai Haim Ferder, Idit (also Edit) Ferder, Tom Ferder, the RF 2021 and TF 2021 irrevocable trusts, Simba IL Holdings, LLC, Serenade Newport, LLC, The Haim Family Trust, VAD & Company, Inc. and their relatives, related parties and transferees, but not the debtors or the CODI parties; Grant Thornton; Josh Gaynor; investment contract counterparties, the non-debtor parties to contracts with the debtors or a Ferder affiliated party under which they provided consideration purportedly for the shared purchase of, or loans secured by, diamonds, precious stones or jewelry in exchange for a return of principal plus interest or other return; any person or entity listed on Exhibit I.69 to the plan supplement; any relative, shareholder, member, advisor, attorney, professional, related party or beneficiary of the foregoing; and any immediate or mediate transferee of property from them. The CODI parties, the debtors, the Lugano Prive Investment Trust, the committee and its members in that capacity, and their non-Ferder related parties are carved out of the exclusion.
• Reciprocal settlement releases: the bankruptcy release parties, to the extent controlled by a party, release the CODI release parties, and the CODI release parties reciprocally release the bankruptcy release parties, in each case as of the plan effective date, covering prepetition matters with the debtors, the debtors' business, the debtors' actual or alleged fraud, the Chapter 11 cases, the CODI claims and any other claims that were or could have been asserted. The bankruptcy release parties are the debtors and estates, the committee and its members solely in that capacity and not as parties that transacted with the debtors or any excluded party, and their related parties, excluding any excluded party. The CODI release parties are the CODI parties and their related parties, including Patrick A Maciariello and Raj U. Dalal, excluding any excluded party and the debtors and their subsidiaries. The settlement designates the bankruptcy release parties and the CODI release parties as third-party beneficiaries with the right to enforce the releases; otherwise the settlement confers no rights on non-parties.
• The settlement also bars every party from encouraging or voluntarily cooperating in litigation against the CODI release parties; requires the parties, for 24 months after its effective date, to respond at the requesting party's expense to reasonable information requests about third-party litigation between a third party and the lender relating to the debtors, without requiring any CODI release party to incur costs; and keeps the May 2026 mediation materials confidential, with no public statements about the settlement except as the plan provides or law requires.
• Excluded from the settlement releases are the CODI claims; the CODI recoveries; claims a CODI party may assert against another CODI party or its officers, directors, members, managers, trustees or employees; any obligation arising under the settlement itself; and any claim or litigation by a party against a third party not expressly released, including claims by the debtors, estates, liquidation trust or CODI release parties against any excluded party, against any committee member in a capacity other than as a member, and against any investment contract counterparty. The third-party plan release likewise preserves post-effective date obligations under the plan documents, intra-CODI claims and allowed claims solely against the debtors, while the debtor release preserves post-effective date obligations.
• The SEC is not a releasing party under the plan, and the U.S. Trustee provides no release.

Exculpation and Injunction

• Exculpated parties are the debtors; the creditors' committee and each of its members solely in that capacity; Thomas FitzGerald; L. Spencer Wells; and their respective related parties serving after the petition date to the extent they are estate fiduciaries. No Ferder affiliated party is an exculpated party. Exculpation runs to acts and omissions between the petition date and the effective date in connection with the cases, the plan documents and the settlement, excepting acts determined by final order to constitute actual fraud, willful misconduct or gross negligence, and exculpated parties may reasonably rely on advice of counsel. The court found the provision narrowly tailored to protect estate fiduciaries from inappropriate litigation.
• From the effective date, all persons and entities who have ever held or will hold a claim or equity interest, together with their present and former employees, agents, officers, directors, members, principals and affiliates, are permanently enjoined, solely as to claims, interests and causes of action dealt with under the plan, from commencing or continuing any action against or affecting property dealt with by the plan; enforcing, levying, attaching or collecting any judgment against such property; creating, perfecting or enforcing any lien or encumbrance against such property; asserting setoff unless formally asserted in a timely filed proof of claim or a document filed before entry of the confirmation order, or any right of subrogation against any debt owed to the debtors; and acting in any manner that interferes with implementation or consummation of the plan. The injunction does not apply to any action by one CODI party against another. By accepting a distribution, each holder of an allowed claim is deemed to consent to the injunction.
• All injunctions and stays in existence on the confirmation date under sections 105 or 362 remain in full force until the cases close. Consistent with section 1141(d)(3), the debtors receive no discharge.

Causes of Action

• Causes of action not released are preserved and transferred to the liquidation trust under section 1123(b), with tax refund causes of action preserved and vested in the post-confirmation debtor. From the effective date the trust retains all rights to commence, pursue, litigate or settle any and all causes of action, including all avoidance actions and all causes of action against the excluded parties.
• No person may rely on the absence of a specific reference in the plan, plan supplement or disclosure statement as a waiver or indication that the trust will not pursue available avoidance actions or causes of action; the debtors, the trust and the post-confirmation debtor expressly reserve all rights to prosecute claims against any person other than the released parties.
• Contributed claims are all causes of action against the auditor related in any way to the debtors, their predecessors, affiliates, businesses or any excluded party, that the holder elects to contribute to the trust. Except for the lender's auditor claim, all contributed claims are irrevocably contributed on the effective date.
• The tax refund covers all federal, state and local income and other tax refunds owing or becoming owing to any debtor, including refunds owing to the post-confirmation debtor. Agency agreement proceeds are all cash, including proceeds of the irrevocable standby letter of credit naming Lugano Diamond & Jewelry, Inc. and Compass Diversified Holdings as beneficiaries, received under the agency agreement with Enhanced Retail Funding LLC, net of reasonable recovery expenses.

Executory Contracts and Unexpired Leases

• All executory contracts and unexpired leases are rejected on the effective date except those previously assumed or rejected and those listed on the schedule of assumed agreements, which are assumed and assigned to the liquidation trust. The court approved the assumptions, the assignments and the insurance rights transfer, and found the debtors exercised sound business judgment in rejecting the remainder as providing no benefit to the estates in the wind-down.
• For the non-residential real property leases identified in Exhibit C to the confirmation order, the deemed rejection effective date is Oct. 31, 2026. The debtors or the trust must perform all section 365(d)(3) obligations until the applicable rejection date, and any claim arising under a deferred rejection lease from Oct. 1, 2026 through Oct. 31, 2026 is deemed an administrative claim. The deferred rejection leases cover premises at 620 Newport Center Drive (Suites 100, 700 and 800), 660 Newport Center Drive (Spaces ZB26, ZB04, ZB05 and ZB06), and 545 Newport Center Drive (including Space 533S) in Newport Beach, California; The Moore Miami at 4040 NE 2nd Avenue, Miami; 501 E. Dean Street, Aspen; and 8510 NW 17th Lane, Ocala, Florida.
• Without limiting its other obligations relating to the agency agreement, Enhanced Retail Funding LLC must perform all rent and other obligations arising under the affected leases consistent with section 365(d)(3) during the deferred rejection period and indemnify the debtors, the estates and the trust for claims arising from activities conducted during that period, including all deemed administrative claims.
• Cure payments are as set forth in the plan supplement; the confirmation order is a conclusive determination of cure amounts and of adequate assurance of future performance, and any counterparty that failed to timely object is deemed to have assented. Assumption and payment of the applicable cure fully releases any claims or defaults under the assumed agreement, including change-of-control and other bankruptcy-related defaults.
• Notwithstanding rejection, the debtors or, after the effective date, the trust may assign a rejected contract or lease to an acquiring entity with the counterparty's consent, without further action in the cases. That provision does not apply to insurance contracts.

Insurance

• On the effective date the theft policy, the directors and officers policies and any other insurance contracts identified in the plan supplement that are in force, current and unexpired are treated as executory contracts, assumed and assigned to the liquidation trust under section 365 as the insurance rights transfer; all other insurance contracts, if executory, are rejected as of the petition date.
• For insurance contracts that are neither D&O nor representations and warranty policies, the contracts may, with the written consent of the debtors or the trustee and the counterparty, be deemed amended to add as first named insured, or as assured or insured in the case of a theft policy, any entity that has acquired or will acquire the rights to operate the businesses formerly operated by Lugano Diamonds & Jewelry Inc. and by Lugano Prive, LLC, with any such amendment applying only to dates on or after Sept. 1, 2026. The excluded D&O policies are Axis Policy No. P00100174509801, Scottdale Policy No. EKS3380678, Travelers Policy No. 107710744, Arch Policy No. ABL1000214-00 and XL Specialty Policy No. ELU205194-25; the excluded representations and warranty policy is Gemini Policy No. 8072920.
• Except as provided in the N.B.S. stipulation and order, the trust has the exclusive right to file, prosecute and settle claims under any insurance contract for any claim, loss, damage, act or omission arising before closing of a sale of a business to an acquiring entity, is entitled to the resulting payments or proceeds, and must be acknowledged in writing as sole loss payee. If an acquiring entity receives payment on account of a pre-Sept. 1, 2026 loss, the payment is property of the trust or of N.B.S. Diamonds LLC dba Scarselli to the extent the stipulation so provides, held in trust and promptly remitted. Neither the debtors nor the trust bears liability with respect to any such insurance contract.
• All theft policy proceeds, except as provided in the N.B.S. stipulation and order, are property of the trust as a specified asset. The theft policy comprises the primary and excess all risks (LDI) policies nos. B080123941W24 and B080123942W24 and jewelers block policy no. B1161K25DY247, each issued by Lloyd's syndicates and companies insuring against, among other things, theft of certain of the debtors' precious stone inventory. The settlement agreement's theft policy definition lists only the two all-risks policies and omits the jewelers block policy; the plan, which includes all three, controls in any conflict with the settlement.
• Travelers Casualty and Surety Company of America's rights, claims and defenses under its policies are unaffected by the plan, plan supplement and confirmation order, including Article XI, except as to specified provisions: the assumption and assignment of the Travelers policies and related cure and insurance rights transfer, though the trust, trustee and oversight board have no coverage for acts or omissions occurring after the effective date; the injunction and exculpation sections; provisions requiring timely filing of proofs of claim or administrative claim requests; and the retention of jurisdiction, without prejudice to any Travelers argument that litigation belongs in another forum. The first clause of the injunction does not apply to Travelers as to any dispute arising under or affecting the Travelers policies.
• The plan preserves current and former directors' and officers' rights to D&O coverage, indemnification, advancement and setoff or recoupment defenses, subject to the bar date order and the plan's assertion requirements; gives the estates and the trust no interest in D&O payments to them; and does not require them to seek stay relief to access coverage, while the estates and the trust reserve all causes of action against them. Insurers are barred from denying, altering or delaying coverage based on the Chapter 11 cases or the plan. The special committee represented to the Ferder parties that its members have Side A coverage through the end of calendar year 2026.

Resolution of Objections

• SEC: no provision of the plan documents precludes the SEC from enforcing its police or regulatory powers against any person, including a debtor, in any forum, or enjoins it from commencing or continuing claims, proceedings or investigations against any debtor or non-debtor, provided that collection from trust assets on a monetary claim against a debtor follows the plan and the debtors or trustee may seek to have such matters adjudicated in the Bankruptcy Court. The plan's subordinated claim definition does not apply to any SEC claim absent the SEC's agreement or a determination by the court outside the confirmation order that a non-compensatory penalty claim of the SEC may be subordinated, with all subordination rights and defenses preserved on both sides. The debtors, post-confirmation debtor and trust must maintain books and records subject to any governmental subpoena, preservation letter or investigative request, may not destroy or abandon the debtors' records without at least 60 days' advance written notice filed on the docket and served on SEC staff, and remain subject to SEC requests and subpoenas.
• Ferder parties: none of the Ferder affiliated parties granted the non-debtor releases, and all are deemed to have opted out. Their rights to assert, prosecute, defend or recover on any claims or causes of action, including for fraud, indemnity, contribution, reimbursement, subrogation, breach of fiduciary duty, aiding and abetting or conspiracy, against any non-debtor released party or any other person other than the debtors and their estates are unaffected by the injunction, the third-party release, the trust agreement or the settlement. To the extent set forth in a timely filed proof of claim, they reserve setoff, recoupment and other defenses against any claim or demand asserted against them. They may recover from the estates or the trust only on account of an allowed claim. Claims Ferder may have against any non-professional for breach of the March 8, 2026 confidential information stipulation among the special committee, the committee and Ferder are preserved and not barred by exculpation, and nothing releases direct, non-derivative claims between any Ferder affiliated party and any CODI party in either direction.
• The debtors, and the trustee from the effective date, assume and are bound by the Stipulation by and Between Debtors and Ferder Parties Respecting Confirmation of the Plan and Related Matters dated Sept. 23, 2026, attached as Exhibit D to the confirmation order. Under that stipulation the Ferder parties withdrew their disclosure statement and confirmation objections with prejudice. Ferder, for himself and all Ferder insureds, irrevocably waived all rights to seek, receive, recover or retain more than an aggregate of $1.2 million in proceeds under the Travelers policy, agreeing to remit any overage to Travelers within five business days, with the cap covering all amounts previously, currently or later paid to or for the benefit of any Ferder insured; neither Ferder nor any Ferder insured may seek recovery under the policy for fees incurred in asserting his administrative claim. In exchange, the debtors and, upon the effective date, the trustee covenanted to manage the estates' claims and any requests for payment of Travelers policy proceeds within their control, specifically including the debtors' own requests, so as to preserve $1.2 million of remaining available proceeds for covered defense fees and expenses of the Ferder insureds. The debtors represented that the only asserted matters known to them that may implicate the policy are the Ferder parties' defense fee requests subject to the cap, invoices or indemnity requests for defense costs in litigation against the debtors, the estates' claims against the one remaining Lugano officer not released under the plan, and claims by certain of the lender's directors and officers. Nothing in the stipulation affects the rights of any other claimant, including Josh Gaynor, or alters the policy's priority of payments, and the estates acknowledged that Side A loss claims have priority over Side B and C claims.
• Josh Gaynor, an excluded party under the plan: deemed to have complied with the requirement to assert setoff in a document filed before entry of the confirmation order, and his rights to assert indemnification, setoff, recoupment, counterclaims or other defenses solely as a defense to any claim brought against him by or on behalf of the debtors, the estates, the trust or their successors are reserved and preserved. He has not granted and is deemed to have opted out of the third-party releases, and his affirmative rights against non-debtor released parties and other persons other than the debtors and their estates are unaffected by the injunction, the release, the confirmation order, the trust agreement or the settlement.
• Irvine landlord: the setoff and recoupment rights of 620 NCD LLC, Fashion Island Retail LLC and The Irvine Company, LLC under the March 31, 2005 office lease for 620 Newport Center Drive, Suites 100, 700 and 800, and the April 17, 2022 retail lease for 545 Newport Center Drive, are preserved as to security deposits, prepaid rent and other amounts owed to or held by the landlord, provided setoff rights are asserted in a timely filed proof of claim, including any rejection claim filed by the bar date. The stay relief order entered at Dkt. No. 419 remains in full force and is not modified or superseded. All parties' rights and defenses as to disposition of the proceeds of the U.S. Bank National Association letter of credit issued in the landlord's favor are expressly preserved: the landlord may retain and apply the proceeds under the leases pending a final, non-appealable determination and need not escrow, segregate or return them, and no party may seek to restrict that right by application of section 502(b)(6) before such determination; the debtors reserve all rights to object to any landlord claim and to seek turnover of proceeds exceeding the allowed amount. No landlord claim may be disallowed, expunged, reduced, reclassified or otherwise affected without prior written notice to the landlord and an opportunity to be heard. Debtor-owned personal property and FF&E not removed from the premises by the rejection date is deemed abandoned under sections 554 and 363, and the landlord may use or dispose of it in its sole discretion free and clear of liens, claims and interests without further order or liability.

Key Dates and Bar Dates

• Petition date: Nov. 16, 2025. General claims bar date: Jan. 27, 2026, which also governed section 503(b)(9) claims. Governmental claims bar date: May 15, 2026.
• Administrative claims, other than professional fee claims and section 503(b)(9) claims, must be filed by the first business day 35 calendar days after the effective date, or a later date set by the court with the trustee's consent; failure to file bars, estops and enjoins the holder and the claim is deemed released and extinguished as of the effective date without objection or further order. No request is needed for a previously allowed administrative claim.
• General unsecured claims must be filed by the earlier of any date set by prior court order and the first business day 30 calendar days after the effective date, including claims of current officers, directors and employees for indemnification, contribution or reimbursement, except to the extent deemed filed under section 1111(a).
• Rejection damages claims and deemed administrative claims must be filed by the first business day 30 calendar days after the effective date for contracts and leases rejected under the plan or confirmation order; by Nov. 30, 2026 for the deferred rejection leases; and for contracts rejected under any other court order, by the earlier of the date set in that order and the first business day 30 calendar days after the effective date. Untimely claims are forever disallowed, barred and unenforceable, subject to the notice requirement running in favor of the Irvine landlord.
• Final professional fee applications are due no later than 45 calendar days after the effective date, served on counsel to the liquidation trust, counsel to the lender and the U.S. Trustee; objections are due 21 calendar days after the applicable application is filed, absent a longer period allowed by order or agreement.