Lusix, an Israel-based synthetic-diamond producer, has requested temporary protection from creditors due to accumulating debts of approximately $28 million, according to reports from local media. The company, facing financial challenges, sought a six-week stay of proceedings after unsuccessfully appealing to its shareholders for a $22 million cash infusion, Israeli news outlet Ctech reported Monday.
Without this funding, Lusix risks insolvency. The company is currently engaged in merger negotiations with another Israeli firm operating in the same sector, according to the report.
Founded eight years ago by technology entrepreneur Benny Landa, Lusix garnered attention in 2022 when LVMH Luxury Ventures invested in the business. Lusix specializes in producing diamonds through the chemical vapor deposition (CVD) method at its factory in Modi’in, Israel. To date, the company has raised over $150 million from investors, Ctech noted. Landa retains a 25% stake in the company.
When contacted, Lusix declined to comment on the situation.
The financial troubles stem from a significant drop in the price of rough lab-grown diamonds, which severely impacted Lusix. The company had turned profitable by 2020, but lab-grown diamond prices plummeted by 90% from 2020 to June 2022, according to Ctech. This downturn led to Lusix laying off 80 employees in the past year.
In addition to the decline in diamond prices, Lusix attributed its difficulties to broader global economic conditions and the Israel-Gaza war. These factors increased raw material costs and caused delays in goods transportation. Additionally, the expenses related to opening its Modi’in factory placed further strain on the company’s finances. Between 2021 and 2023, Lusix was forced to secure bank loans and place liens on its assets, the report revealed.
The company’s court filing detailed the challenges it has faced, including receiving warning letters from creditors threatening to cut off electricity to its factories and take legal action. The filing highlighted the ongoing merger discussions, the collapse in diamond prices, and Lusix’s cash flow problems, noting that the company lacks the time to stabilize on its own without court intervention.
In the filing, Lusix also outlined a five-year plan to repay its debts and continue operating during the court proceedings. The debts include liabilities to banks, retail companies, and suppliers. The company has placed 60 of its 90 employees on unpaid leave, the report said.
“Lusix was founded with the vision of restoring Israel’s leadership in the diamond industry,” Landa said, as quoted by Ctech. “There is no shame in reaching this point after trying. I am very proud of what we’ve built, and I hope the company can find a new way forward.”
The outcome of Lusix’s appeal for temporary court protection remains to be seen as the company works to resolve its financial issues and stabilize its operations.
