Two U.S.-based subsidiaries of the vodka producer Stoli Group have filed for Chapter 11 bankruptcy protection in Dallas, Texas, citing the fallout from a significant cyberattack, the Russian government’s seizure of its remaining distilleries in Russia, and conflicts with creditors.
The company that handles the import and distribution of Stoli-owned liquor brands in the U.S., Stoli Group USA, filed for Chapter 11 bankruptcy protection last week, as did affiliate bourbon brand Kentucky Owl. Both are subsidiaries of Luxembourg-based Stoli Group, which itself is not bankrupt.
The bankruptcy filings showed that the two companies are $84 million in the red.
Decades-Long Dispute with Russia
The Russian government has been waging a legal battle against Stoli for decades, as it seeks to reclaim ownership of vodka brands that were privatized in the 1990s, after the collapse of the former USSR.According to court filings, the Russian government has sought to bring criminal charges against Stoli’s owner Yuri Shefler, and seize the company’s assets. Stoli has described these actions as “politically motivated.”
In July 2024, the Russian government seized Stoli’s last two distilleries in the country and branded both Shefler and Stoli Group as “extremists” due to their opposition to Russia’s invasion of Ukraine, according to court documents.
While Stoli had already shifted its vodka production to Latvia, the seized distilleries were valued at approximately $100 million.
Impact of the Cyberattack
A month later, in August 2024, Stoli suffered a ransomware attack and data breach that severely disrupted its global operations, from which it is still in the process of recovering—the attack forced the company to revert to manual bookkeeping for essential business functions.Court filings state that Stoli’s centralized business software is not expected to be fully operational until at least the first quarter of 2025.
The cyberattack strained relations with Stoli USA and Kentucky Owl’s primary lenders, as the two companies were unable to provide them with up-to-date financial reports. According to court filings, the lenders claim that the two companies have defaulted on their debt to them—a total of $78 million.
As a result, lenders cut off access to financing for both companies and attempted to prevent Kentucky Owl and its vendors from moving or selling inventory without prior approval.
According to court documents, Kentucky Owl holds approximately 29,000 barrels of bourbon aging at a contractor-owned storage facility in Bardstown, Kentucky.