Charles & Colvard Files Chapter 11, Reports $19.2M Assets, $10.5M Debt

Charles & Colvard, Ltd. filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Eastern District of North Carolina on March 2, 2026, listing $19.2 million in total assets and $10.5 million in total debts and stating its intent to continue to operate as a debtor in possession. The company followed with a March 3 news release and an SEC Item 7.01 disclosure attaching that release as Exhibit 99.1, and it said it will seek customary first-day relief to minimize disruption to employees, suppliers, and customers.

The SEC filing and the company press release make clear the immediate aim is operational continuity: motions seeking authority to pay employee wages and benefits and to pay certain vendors and creditors will be filed so that Charles & Colvard can "conduct business as usual during the restructuring process." The filing places first-day procedures at the center of the case, while the automatic stay under 11 U.S.C. §362 will, at least temporarily, pause many creditor enforcement actions.

Board chair Michael R. Levin framed the court-supervised process as a necessary step. Levin said, "After thoroughly evaluating our alternatives and considering recent events and the market pressures facing our industry, the company’s board of directors decided that a court-supervised process is the best path forward to make the changes needed to ensure Charles & Colvard’s long-term success." Levin’s declaration, filed March 3, stated the company’s business had been hurt by "the lab diamond boom" and that "inflation, economic headwinds, and an evolving competitive landscape have [also] negatively impacted the jewelry and gemstone industry in recent years."

The filing also flags specific contractual risks that could be accelerated by the bankruptcy. The SEC disclosure identifies a Convertible Secured Note Purchase Agreement with Ethara Capital LLC dated June 24, 2025, and a Lease Agreement with SBP Office Owner, L.P. dated December 9, 2013, as amended December 23, 2013; April 15, 2014; and January 29, 2021, and warns that the Chapter 11 "may trigger events of default under certain of the Debtor’s contracts, agreements or debt instruments, including but not limited to" those agreements, while noting such events "may be stayed pursuant to 11 U.S.C. §362."

There is a discrepancy in public summaries of the petition’s schedules: the petition itself lists the $19.2 million/$10.5 million totals, while a market data provider presented the debtor’s assets and liabilities in ranges of $1 million to $10 million. The specific dollar figures from the petition remain the clearest snapshot of the company’s reported balance as the case opens, and the petition date of March 2, 2026, is the controlling legal filing date.

The filing arrives after a turbulent stretch for the company that for years was the exclusive manufacturer and marketer of moissanite. Levin’s declaration and public materials note a 2025 delisting from Nasdaq, a proxy fight involving Riverstyx Fund with which Levin has been affiliated, litigation with lender Ethara Capital, and disputes with primary supplier Wolfspeed, which itself entered and exited Chapter 11 last year. Management shifts include the termination of CEO Don O’Connell effective January 5, 2026, and director Neal Goldman’s resignation; Marketscreener timeline entries also record a November 17 partnership with VideoShops and other corporate actions. Market quotes published alongside the filing showed ticker CTHR at 0.0700 USD, an intraday move of +40.00%, and a five-day change of +37.25%.

Debtor counsel is listed as Hendren, Redwine & Malone, PLLC, with attorneys Rebecca Redwine Grow, Lydia C. Carpenter, Jason L. Hendren, and Benjamin E.F.B. Waller named in notices. Outside observers summarized the case starkly: "Chapter 11 filing signals severe financial distress and high equity impairment risk," a comment published by Stocktitan, which added that the filing indicates existing capital structures are unsustainable and underscores tight liquidity.

Charles & Colvard has told the court it will use Chapter 11 to "provide Charles & Colvard with the tools, time, and flexibility to engage in discussions with creditors and other parties in interest to implement a financial and operational transformation of the Company." The near-term schedule to watch will include the docketed first-day motions, Levin’s declaration and any cash-collateral or DIP financing filings, which will determine whether the company can keep payroll, suppliers, and inventory moving while it negotiates that transformation.