Lusix, a prominent producer of laboratory-grown diamonds based in Israel, has filed for a stay of proceedings under the country’s new Insolvency Law.
The company, which was founded by Israeli entrepreneur Benny Landa, faces approximately $28 million in debts. This legal action is intended to protect the company from creditors while it works on finalising a merger with another Israeli company.
Financial Struggles and Proposed Merger
Lusix, founded in 2016, is seeking a six-week extension from the courts to finalise a merger with an unnamed Israeli company. The merger would facilitate a capital injection of $22 million from existing shareholders. Without this funding, Lusix has warned it will become insolvent.
The company’s financial difficulties intensified following the sharp decline in laboratory-grown diamond prices, which have fallen by approximately 90% since mid-2022. Lusix, facing increasing competition in the lab-grown diamond market, has implemented cost-cutting measures, including furloughing 60 of its 90 employees and temporarily closing its Modi’in manufacturing facility.
Lusix also incurred costs related to the establishment of a new facility in Modi’in, leading the company to seek bank loans, which were secured by liens on its assets between 2021 and 2023.
Shareholder and Investor Involvement
Lusix has raised substantial funds over the years, with more than $150 million invested in the company to date. Notable investors include luxury goods conglomerate LVMH, which holds a 12% stake, and the More Investment House, which owns 17.5%. Benny Landa, who is the company’s largest shareholder with a 25% stake, funded Lusix independently until 2022.
In June of that year, the company raised $90 million through a SAFE (Simple Agreement for Future Equity) funding round, giving Lusix an estimated valuation of $300-500 million at the time. However, in October 2023, amid falling diamond prices, Lusix was forced to conduct an emergency fundraising round, valuing the company at just $50 million.
Lusix has presented a preliminary five-year plan for repaying its debts, pending the merger and capital injection, with management apparently also working to stabilise operations.
Benny Landa, reflecting on Lusix’s current position, stated, “Lusix was established to bring the leadership of the diamond sector back to Israel. There is no shame in trying and reaching this situation. I am very proud of the company and hope that it will succeed in embarking on a new path.”
