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Cyber attack prompts Stoli Group USA bankruptcy filing
A two-month-long cyber attack on its US operations has contributed to Stoli Group’s decision to voluntarily file for bankruptcy.
Stoli Group USA and its Kentucky Owl American whiskey unit voluntarily filed for Chapter 11 bankruptcy on Thursday (27 November). Also known as Chapter 11 reorganisation proceedings, this legal process will allow the business to continue operating normally, reorganise its debts, and become profitable while pausing payments to creditors.
The application was filed by Holland N O’Neil of Foley & Lardner LLP in the US Bankruptcy Court in the Northern District of Texas.
According to the court papers filed with its bankruptcy petition, Stoli Group USA “is experiencing financial difficulties”.
In a post on X (formerly Twitter), bankruptcy consulting firm RK Consultants said: “With assets estimated between US$100 million and US$500 million against liabilities of US$50m-US$100m, the company enters restructuring with a substantial operational footprint and indicates plans for continued operations with funds expected to be available for unsecured creditors.”
Stoli Group CEO Chris Caldwell said the move will allow the firm to conduct the financial restructuring required to save the business. “The Chapter 11 filing is a temporary measure to protect our people, our brands and our business while the group’s US entities restructure their financing.
“This filing only includes two of our US entities, Stoli Group USA LLC and Kentucky Owl LLC.”
He confirmed that the US business will continue to trade normally as it works through the process, noting that all of the firm’s brands will continue to be available to trade and consumers.
“We will continue to work with our trade partners to drive the brands forward and deliver our award-winning brands with no disruptions.”
The process will commence today (2 December) and is expected to complete in the first half of 2025.
Caldwell said: “We are positive that our actions will create the necessary breathing space to reorganise the business and establish a more appropriate financing structure that enables sustainable operations and future growth.”
Cyber attack
Wider challenges facing spirits brand owners in the US, including longstanding destocking and the slowing down of consumers’ willingness to spend money on spirits, were cited as reasons behind the company’s difficulties.
In addition, Caldwell confirmed the company has been subjected to a cyber attack on its US operations for the past two months.
He explained: “Two months ago, the company was the victim of a malicious cyber-attack which knocked out its ERP (enterprise resource planning) platform and operational systems, since when it has been operating its global business entirely manually while the systems are rebuilt.”
He added: “The Stoli Group has been targeted by the Russian Federation since it was formed nearly 25 years ago. Earlier this year, the company and our owner were both named by the Russian state as ‘extremist groups working against Russia’s interests’.
In 2022, Stoli Group ended the use of its previous name, Stolichnaya, in response to Russia’s invasion of Ukraine.
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