Stoli Group said its two U.S. entities, Stoli Group USA, LLC and Kentucky Owl LLC, filed a motion to convert their Chapter 11 Bankruptcy Act proceedings into to Chapter 7. Control of these U.S. entities will be transferred to a court-appointed trustee, who will oversee the liquidation process.

The filing comes after a judge last October rejected the company's reorganization plan. The judge ruled the plan was not "fair or equitable" to the senior lender, Fifth Third Bank, which holds a claim of about $78 million. The plan relied on using aging bourbon barrels to pay down secured debt, which Fifth Third opposed. The barrels were described as "lousy collateral."

Fifth Third hold a lien on a 420-acre site in Bardstown, Ky., which Stoli originally planned for a $150 million distillery and "bourbon park." The distillery was never built, and, we're told, the property remains undeveloped.

Bardstown Bourbon Co. is also a significant creditor and is owed about $5.5 million for contract distilling and aging. Stoli Group USA doesn't have an operational distillery. About 35,000 barrels will be liquidated as part of the process.

Fifth Third says the 420-acre site, a former stone quary, and stored bourbon won't be enough to satisfy its claims.

This development affects only Stoli Group USA, LLC and Kentucky Owl LLC. All other U.S. and non-U.S. operations, including Louisiana Spirits, SPI Spirits (Cyprus) and global production facilities, are completely unaffected and continue normal operations.

Battling the Russian Government

For more than 25 years, Stoli Group has been engaged in protracted legal disputes with the Russian state over brand ownership and control. Those pressures intensified sharply in recent years, the company said. After the company publicly condemned the invasion of Ukraine and voiced its support for peace, the Russian government designated Stoli an "extremist organization" in Russia.

This was swiftly followed by the confiscation and nationalization of Stoli's state-of-the-art distillery, an asset integral to the company's global production footprint. Soon afterward, Stoli was hit by a large-scale, sophisticated cyberattack that targeted its international operations and impaired systems vital to global distribution. Remediation efforts continue to this day.

The Chapter 11 Process

These geopolitical shocks, combined with a slowdown in the U.S. spirits market and a lack of support and flexibility from the Group's finance partners, led Stoli Group to file for Chapter 11 protection in November 2024. Over the past thirteen months, the Group worked to construct a viable reorganization plan aimed at preserving jobs, stabilizing operations, and protecting long-standing commercial partnerships.

Despite those efforts and extensive negotiations, the Group was unable to reach an agreement with Fifth Third on terms that would allow these two U.S. entities to emerge from Chapter 11 as a going concern.

Consumer Availability

Stoli Group said it believes there is sufficient inventory of Stoli brands in the U.S. market to ensure consumers will be able to continue purchasing these products for the foreseeable future.

The global Stoli Group business continues to operate normally inside and outside the United States, with production facilities and distribution networks unaffected by this development.

About Stoli Group 

Headquartered in Luxembourg, Stoli Group was established in 2013 and is responsible for the production, management, and distribution of the Group's global spirits portfolio. Mainly known for the Stoli Vodka brand, Stoli Group has expanded its portfolio in recent years to appeal to premium on-premise and more sophisticated global consumers.

The company has production facilities in Spain, Italy, Argentina, and the United States some of which are steeped in history dating back to the early part of the last century. 

Signature brands are: Stoli Vodka, Elit Vodka, Bayou Rum, Kentucky Owl, Villa One, Gator Bite Rum Liqueurs, Cenote Tequila, and Se Busca Mezcal. With a presence across a network of more than 176 markets, Stoli Group works with 200 distributors around the world.