Lugano Files for Bankruptcy, Puts Business Up for Sale

California-based retailer Lugano Diamonds & Jewelry has filed for Chapter 11 bankruptcy protection and is seeking a buyer for the business.

The company has applied for court approval to begin a “value-maximizing sale process for substantially all of its assets” under Section 363 of the US Bankruptcy Code, it said Sunday in a statement. The company continues to carry out business, it added.

Investment firm Enhanced Retail Funding will immediately begin working with the company to “support the smooth continuation of retail sales and operations” and serve as the stalking-horse bidder, meaning it will set a bottom floor that any future bids must beat. The company expects to conduct an auction once qualifying bids come in.

Lugano has also asked the court for approval of a $12 million debtor-in-possession financing facility that could provide up to approximately $10 million in new liquidity to fund operations during the case.

It is further seeking the court’s go-ahead to continue paying employee wages and benefits, maintain customer programs, and satisfy “post-petition” obligations to vendors and partners — referring to those incurred following the bankruptcy filing.

Headquartered in Newport Beach, Lugano designs, manufactures and retails high-end jewelry at eight boutiques in the US as well as a traveling one that accompanies the equestrian circuit.

Earlier this year, Lugano was the subject of an internal investigation over financial irregularities. Company CEO Moti Ferder stepped down, with Joshua Gaynor succeeding him as interim CEO. An investor in Lugano also sued the company.

“As this process is underway and we approach the holiday season, we look forward to continuing to provide our valued clients with unique, timeless pieces for themselves and their loved ones,” said Gaynor.

Image: A Lugano boutique in London. (Lugano Diamonds)