The spirits industry has faced economic problems since the end of the Covid-19 pandemic, which continues to grow.
Reasons cited for financial difficulties include the lingering effects of the Covid-19 pandemic, rising operational costs caused by inflation, falling demand for alcoholic beverages and legal issues.
A parade of distilleries went to bankruptcy court in 2025, including craft spirits maker Boston Harbor Distillery of Dorchester, Massachusetts, which on March 31 filed for Chapter 11 bankruptcy protection, seeking to reorganize its whiskey, rum, gin, spirits and distilled beer business.
Following Boston Harbor’s filing was Portland, Ore.-based House Spirits Distillery LLC, parent of high-end Westward Whiskey, which filed its Subchapter V petition on April 6, 2025, in the U.S. Bankruptcy Court for the District of Delaware.
Just behind House Spirits Distillery and Boston Harbor was San Antonio-based whiskey brand Devils River Distillery LLC, which filed for Chapter 11 bankruptcy protection on May 1, 2025, to reorganize its business and continue operating.
Other distillery bankruptcies last year included SVG 26 LLC, owner of Bethel, NY-based award-winning whiskey and vodka company The Alton Distillery, which filed for Chapter 11 bankruptcy on September 25, and Littleton, Colorado-based 52eighty Distilling Corporation, which filed for Chapter 7 liquidation on October 2, 25.
Ohio-based AM Scott Distillery LLC also filed for Chapter 11 bankruptcy to reorganize on Dec. 22.
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And now, popular vodka and bourbon brands Stoli Group USA LLC and Kentucky Owl LLC filed motions to convert their Chapter 11 bankruptcies to Chapter 7 liquidation on Jan. 15 after failing to reach an agreement with their primary creditor on terms that would allow them to emerge from Chapter 11 as going businesses.
Control and management of the US entities will be transferred to a court-appointed administrator who will oversee the liquidation process, according to a statement from Stoli USA Group.
Stoli Group USA and affiliate Kentucky Owl initially filed for Chapter 11 bankruptcy reorganization on November 27, 2024, facing severe financial difficulties after defaulting on more than $78 million in secured debt owed to Fifth Third Bank NA.
The Luxembourg-based subsidiary of the Stoli Group, which produces and produces vodka, bourbon and other spirits for sale in the U.S. and globally, blamed several challenges that led to its Chapter 11 filing, according to court documents.
The New York-based debtor cited a drop in demand for alcohol and spirits that began after the 2020 Covid-19 pandemic and increased operating costs and inflation in the global economy.
The company also cited a credit dispute with Fifth Third Bank and a serious data breach and ransomware attack in August 2024, according to a statement from company CEO Chris Caldwell.
The company said in the statement that it has been in a 23-year legal battle with the Russian government, which has cost it millions of dollars in legal costs in a fight over its rights to privatize Stolichnaya and Moskovskya vodkas it acquired in the 1990s after the fall of the Soviet Union.
In March 2000, Russian President Vladimir Putin issued an executive order restoring and protecting the Russian state’s rights to vodka brands that had been privatized in the 1990s.
More bankruptcies:
In July 2024, the Russian government seized the last two Stoli distilleries in Russia, valued at approximately $100 million, in connection with the Russia-Ukraine war because the company was designated as extremists and for providing humanitarian aid and engaging in marketing activities to support refugees in Ukraine, the statement said.
“For more than 25 years, the Stoli Group has been involved in protracted legal disputes with the Russian state over the ownership and control of the brand,” the company said in a statement. “These pressures have suddenly intensified in recent years.”
Boston Harbor Distillery, March 31, 2025
House Spirits Distillery LLC, April 6, 2025
Devils River Distillery LLC, May 1, 2025
SVG 26 LLC, September 25, 2025
52eighty Distilling Corporation, October 14, 2025
AM Scott Distillery LLC, December 22, 2025.
“After the company publicly condemned the invasion of Ukraine and expressed support for peace, the Russian government designated Stoli an ‘extremist organization’ in Russia,” the statement said.
“This was quickly followed by the seizure and nationalization of Stoli’s state-of-the-art distillery, an integral asset to the company’s global manufacturing footprint,” it said.
Stoli Group was established in 2013 and includes several signature brands including Stoli Vodka, Elit Vodka, Bayou Rum, Kentucky Owl, The Wiseman, Cenote Tequila, Villa One, Se Busca Mezcal, Tulchan Gin and Gator Bite Rum Liqueurs.
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This story was originally published by TheStreet on January 16, 2026, where it first appeared in the Retail section. Add TheStreet as a favorite source by clicking here.
