Compass Diversified Enters Settlement Agreement with Lugano

Compass Diversified announced that it has entered into a settlement agreement and mutual release and a related plan support agreement in connection with the Chapter 11 proceedings of Lugano Diamonds & Jewelry Inc. and its affiliated debtors. The settlement, reached with Lugano and its official committee of unsecured creditors and other parties in interest, will be incorporated into Lugano's proposed plan of liquidation and establishes the framework for CODI's recovery from the Lugano estate. Under the settlement, CODI has agreed to support Lugano's proposed plan of liquidation, which incorporates the settlement terms. The settlement is designed to accelerate the resolution of Lugano's bankruptcy, facilitate an orderly liquidation of Lugano's assets, allow for a timely distribution of recoveries, and provide greater certainty of recovery than continued litigation. Subject to creditor approval and bankruptcy court confirmation of the plan of liquidation, CODI will be entitled to certain recoveries from the Lugano estate. This includes proceeds from the disposition of Lugano's inventory, tax refunds, insurance, and litigation claims pursued through a liquidation trust. Additionally, in exchange for releases granted by CODI and its related parties, CODI and its related parties will receive a release of claims from the Lugano estate. The settlement will become effective only upon satisfaction of the conditions set forth in the agreements, including the effectiveness of Lugano's plan of liquidation. There can be no assurance that the plan of liquidation will be confirmed or become effective, or as to the timing thereof. The company also continues to advance its previously announced review of the management services agreement, which is intended to further align incentives with shareholder interests and drive incremental shareholder value. CODI expects to complete this review in the coming weeks.