Stoli Group USA, the iconic vodka maker that rose to fame for its bold history, has filed for Chapter 11 bankruptcy, marking a significant financial downturn for the luxury brand. Known for its controversial origins, which include a long-standing battle over a recipe supposedly rooted in Russia, Stoli is facing mounting challenges in a competitive market. Despite being a household name in high-end spirits, the company is now grappling with a weakened financial position. Keep reading to learn more about the details of the company’s Chapter 11 filing.
Why did Stoli Group USA for Chapter 11 bankruptcy?
Stoli Group USA, a subsidiary of the global SPI Group, filed for Chapter 11 bankruptcy protection on November 27th, in the U.S. Bankruptcy Court for the Northern District of Texas. In its petition, the company stated that the decision was “appropriate and in the best interests of the Company.”
On the same day, its affiliate, Kentucky Owl, also filed for bankruptcy.
Chris Caldwell, Global CEO of Stoli Group USA, explained in the bankruptcy filing that the company is currently facing significant balance sheet and liquidity challenges,” driven by a variety of factors. These include reduced demand for spirits and alcohol following the COVID-19 pandemic, particularly starting in 2023, as well as rising costs and inflation.
Additionally, the company has been impacted by operational setbacks, including a ransomware attack in the fall and a dispute with a lender. Caldwell noted that systems disrupted by the cyberattack are not expected to fully return to operation until the first quarter of 2025.
The bankruptcy filing also referenced the long-standing and costly legal battle with Russia over the rights to Stoli vodka, which has compounded the company’s financial strain.
According to its voluntary petition, Stoli Group USA’s assets are estimated to be between $100 million and $500 million, while its liabilities range from $50 million to $100 million.
Stoli vodka, a product made in Latvia, has been a fixture in the spirits market since the late 1930s. The brand underwent a name change from Stolichnaya to Stoli in 2022 in response to the Russian invasion of Ukraine.
It is important to note that while Stoli Group USA has filed for bankruptcy, the broader Stoli Group, which owns the iconic Stoli vodka brand, continues its regular operations globally.
What’s next for Stoli Group USA?
Caldwell, who has led the company since the summer of 2023, stated that filing for bankruptcy will offer the company “a breathing spell and reprieve,” creating the necessary “runway for a Chapter 11 plan process” aimed at restructuring its balance sheet.
Caldwell emphasized that this strategy would allow the company to emerge from bankruptcy as “leaner, stronger entities.” Overall, Caldwell is hopeful that this move will put Stoli Group USA on a path to recovery and long-term financial stability.
What will happen to the employees?
Stoli Group USA and Kentucky Owl are working on a “joint plan of reorganization,” which Caldwell stated will “preserve employee jobs” and ensure that the companies can continue to operate as viable businesses in the months ahead. The plan aims to safeguard employment and maintain operations while the company restructures and works toward recovery.
Will the customers be affected?
During the bankruptcy proceedings, customers will still be able to purchase Stoli Group USA and Kentucky Owl alcohol products, according to a report by CNN. Despite the financial restructuring, the companies aim to ensure that their products remain available to consumers throughout the process.