Stoli appoints trustees as bankruptcy court averts liquidation
Independent professionals will run vodka maker Stoli’s US entities following a settlement with Fifth Third Bank. The move keeps the door open for restructuring rather than asset sales.
A Texas bankruptcy judge has ordered separate trustees to take the helm at Stoli USA and Kentucky Owl, bringing independent management to the vodka brand’s beleaguered American operations. The appointment, approved on Thursday, 5 February, closes one chapter in the company’s descent through Chapter 11 whilst leaving its ultimate fate still uncertain.
As per Law360, the ruling came after Stoli’s primary lender, Fifth Third Bank, opposed converting the cases to Chapter 7 liquidation. Under the settlement, both parties withdrew their competing motions: the bank dropped its objection to trustee appointments, and efforts to force immediate liquidation were abandoned.
The trustees will assume control of daily operations and bank accounts whilst current management steps aside.
Cash flow and creditor arrangements
The court authorised continued use of cash collateral to cover operating expenses, taxes, professional fees and inventory costs. Key deadlines have been extended to mid-February 2026. A new mechanism, the Stoli GUC Escrow, will channel future cash flows and any litigation recoveries to unsecured creditors.
Whether the company can generate those flows remains to be seen, as Stoli Group’s two US entities face potential asset sales or restructuring. Either path could still end in liquidation, though the settlement buys time.
Decades of pressure, then a cyberattack
According to Stoli Group, the financial crisis stems from decades of legal and geopolitical strain, compounded by operational disruption from a cyberattack. The company’s public condemnation of Russia’s invasion of Ukraine in 2022 brought swift retaliation. Moscow branded Stoli an “extremist organisation” and seized one of its key distilleries, a facility central to global production.
The brand, which formally changed its name from Stolichnaya in 2022 to distance itself from Vladimir Putin’s regime, has long been entangled in disputes over ownership and national identity. Its vodka is distilled in Latvia, though the Russian association persists in the public mind.
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Legal skirmishes and jalapeño vodka
Stoli Group also faces a trademark lawsuit from McIlhenny Company, maker of Tabasco. The dispute centres on a jalapeño vodka that Stoli launched in December, one month before Absolut and Tabasco’s co-branded product reached the market. The timing was awkward. Whether it was intentional remains a matter for the courts.
The original filing
Stoli Group (USA) LLC and Kentucky Owl, LLC filed for Chapter 11 protection on 27 November 2024 in the United States Bankruptcy Court for the Northern District of Texas. As reported by the drinks business, court documents listed more than US$100 million in assets and between US$50 million and US$100 million in liabilities.
The portfolio includes Stoli vodka (distilled in Latvia), the super-premium Elit vodka, Villa One Tequila, Achaval Ferrer wine and Bayou rum. Kentucky Owl produces Bourbons ranging from affordable bottles to exclusive releases priced at US$400.
Chris Caldwell, global chief executive officer of Stoli Group, described the filing as a proactive measure. “In order to protect our business, our brands and our people, we have made the proactive decision to file for voluntary Chapter 11 bankruptcy protection whilst we restructure the company for future success,” Caldwell said in a statement. “This filing includes our two US entities (Stoli Group USA LLC and Kentucky Owl LLC) and was filed in the United States Bankruptcy Court for the Northern District of Texas.”
He added that operations would continue as normal during the restructuring. “The business will continue to trade normally as we work through this process. All of our amazing brands will continue to be available to trade and consumers, and we will continue to work with our trade partners to drive the brands forward and deliver our award-winning brands with no disruptions.”
The case was designated as a complex Chapter 11, allowing the business to reorganise its assets and liabilities. Restructuring was initially expected to conclude in the first half of 2025, though events have since overtaken that timeline.
The extremist label
The filing in November followed Russia’s designation of Yuri Shefler, Stoli’s owner, as an “extremist” in July 2024. The Russian prosecutor general’s office confiscated Shefler’s assets in the country, reportedly linked to allegations of financial support for Ukraine. Shefler has been exiled from Russia since 2000 and embroiled in a long-running dispute over the brand’s ownership.
In 2022, Shefler launched a limited-edition bottle featuring the Ukrainian flag and the slogan “#LiberateUkraine” in solidarity with the invaded nation.
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