By Ashwani Mishra, Editor-Technology, 63SATS
Stoli Group USA, the American arm of the Luxembourg-based vodka producer Stoli Group, finds itself at the center of a perfect storm.
The company filed for Chapter 11 bankruptcy protection in Dallas last week, citing the devastating effects of a cyberattack, the Russian government’s seizure of its remaining distilleries, and an ongoing dispute with its lenders.
The filing includes Stoli Group USA LLC, which imports and distributes the company’s liquor brands in the United States, and Kentucky Owl LLC, a high-end bourbon brand. Together, these entities carry $84 million in debt and have committed to restructuring their finances while continuing operations, according to court documents filed Friday.
This Chapter 11 move aims to provide the breathing room needed to recover from the cyberattack, reorganize debt, and ensure job preservation. Despite its financial troubles, Stoli Group USA assures its partners and customers that its award-winning brands will remain available without disruption.
A Complex Crisis
The bankruptcy filing highlights a multilayered crisis.
On the one hand, the company is grappling with the fallout of a malicious cyberattack that crippled its enterprise resource planning (ERP) systems. On the other hand, it faces geopolitical pressures from its historical ties to Russia, where its former distilleries were recently seized by the government.
Chris Caldwell, CEO of Stoli Group, explained the company’s challenges:
“Two months ago, our ERP platform was knocked out by a cyberattack. Since then, we’ve been operating manually while rebuilding our systems. This, coupled with the ongoing geopolitical pressures, has left us no choice but to restructure.”
The company, previously known as Stolichnaya, rebranded to Stoli in 2022 following Russia’s invasion of Ukraine. Stoli Group and its owner have since been labeled “extremist groups working against Russia’s interests,” further complicating its global operations.
Navigating Chapter 11
The Chapter 11 filing, a legal tool designed for businesses seeking to reorganize while pausing payments to creditors, offers a lifeline. Filed by Holland N. O’Neil of Foley & Lardner LLP in the U.S. Bankruptcy Court for the Northern District of Texas, the proceedings will allow the company to continue operations while it restructures its debt.
According to the filing, Stoli Group USA has estimated assets of $100 million to $500 million, against liabilities ranging from $50 million to $100 million. Bankruptcy consulting firm RK Consultants noted on X (formerly Twitter) that the company’s substantial operational footprint suggests a robust plan for continuing operations and addressing obligations to unsecured creditors.
Caldwell framed the move as a temporary measure:
“This filing is a safeguard to protect our people, brands, and business as we restructure financing. We remain committed to our partners and consumers, ensuring our brands remain available without interruptions.”
Fallout from the Cyberattack
The cyberattack, described as “malicious,” has had a profound impact on Stoli Group’s U.S. operations. For the past two months, the company has managed its global business manually, a process Caldwell admitted was both challenging and unsustainable.
Broader Industry Challenges
Stoli Group USA’s troubles are not isolated. The spirits industry in the U.S. is grappling with destocking trends and slowing consumer spending on high-end liquors. For brands like Stoli and Kentucky Owl, which cater to premium markets, these economic headwinds exacerbate operational challenges.
Caldwell acknowledged these broader pressures, saying:
“Slowing consumer demand for spirits, combined with the cyberattack and geopolitical issues, has created a unique set of challenges for our business.”
