The spirits industry has faced economic issues since the end of the Covid-19 pandemic that continue to mount.

Among the reasons given for financial distress are the lasting effects from the Covid-19 pandemic, rising operating costs caused by inflation, decline in demand for alcoholic beverages and legal issues.

Spirits companies file for bankruptcy

A parade of distilleries marched to bankruptcy court in 2025, including Dorchester, Mass.-based craft spirits producer Boston Harbor Distillery, which on March 31 filed for Chapter 11 bankruptcy protection, seeking to reorganize its whiskey, rum, gin, liqueurs, and distilled beer business.

Following Boston Harbor’s filing was Portland, Ore.-based House Spirits Distillery LLC, the parent of high-end Westward Whiskey, which submitted its Subchapter V petition on April 6, 2025, in the U.S. Bankruptcy Court for the District of Delaware.

Right 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, the owner of the award-winning Bethel, N.Y.-based whiskey and vodka company, The Alton Distillery, which filed for Chapter 11 bankruptcy on Sept. 25 and Littleton, Colo.-based 52eighty Distilling Corporation, which filed for Chapter 7 liquidation on Oct. 14, 2025.

Ohio-based A.M. Scott Distillery LLC also filed for Chapter 11 bankruptcy to reorganize on Dec. 22.

Stoli initially filed for Chapter 11 bankruptcy.

Shutterstock

Stoli Group converts to Chapter 7 liquidation

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 senior lender on terms that would allow them to emerge from Chapter 11 as going concerns.

Control and management of the U.S. entities will transfer to a court-appointed trustee, who will oversee the liquidation process, according to a Stoli Group USA statement.

Distiller files for Chapter 11 bankruptcy

Stoli Group USA and affiliate Kentucky Owl originally filed for Chapter 11 bankruptcy reorganization on Nov. 27, 2024, facing severe financial distress after defaulting on over $78 million in secured debt owed to Fifth Third Bank NA.

The subsidiary of Luxembourg-based Stoli Group, which manufactures and produces vodka, bourbon, and other spirits to be sold in the U.S. and globally, blamed several challenges that led to its Chapter 11 filing, according to court papers.

The New York-based debtor cited a decline in demand for alcohol and spirits, which began after the 2020 Covid-19 pandemic and increased operating costs and inflation in the global economy.

The company also cited a lending dispute with Fifth Third Bank and a severe data breach and ransomware attack in August 2024, according to a declaration by the company’s CEO Chris Caldwell.

Stoli Group fought Russian government over rights

The company said in the declaration that it had been in a 23-year legal battle with the Russian government that cost it millions of dollars in court costs in a fight for its privatization rights to Stolichnaya and Moskovskya vodka that it purchased in the 1990’s after the fall of the Soviet Union.

Russian President Vladimir Putin in March 2000 issued an executive order reinstating and protecting the Russian state’s rights to vodka trademarks that were privatized in the 1990’s.

More bankruptcies:

• 64-year-old furniture store franchisee files Chapter 11 bankruptcy
• Golf legend’s iconic brand files for Chapter 11 bankruptcy
• Major health services provider files for Chapter 11 bankruptcy

The Russian government in July 2024 confiscated the last two Stoli distilleries in Russia, valued at about $100 million, in relation to the Russia-Ukraine war, as the company was designated as extremists and for providing humanitarian aid and engaging in marketing activities to support Ukraine refugees, the declaration said.

“For more than 25 years, Stoli Group has been engaged in protracted legal disputes with the Russian state over brand ownership and control,” the company said in a statement. “Those pressures intensified sharply in recent years.”

Top distillery bankruptcies in 2025:

• Boston Harbor Distillery, March 31, 2025
• House Spirits Distillery LLC, April 6, 2025
• Devils River Distillery LLC, May 1, 2025
• SVG 26 LLC, Sept. 25, 2025
• 52eighty Distilling Corporation, Oct. 14, 2025
• A.M. Scott Distillery LLC, Dec. 22, 2025.

“After the company publicly condemned the invasion of Ukraine and voiced its support for peace, the Russian government designated Stoli an ‘extremist organization’ in Russia,” the statement said.

“This was swiftly followed by the confiscation and nationalization of Stoli’s state-of-the-art distillery, an asset integral to the company’s global production footprint,” the statement 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.

Stoli Group signature brands:

• Stoli Vodka
• Elit Vodka
• Bayou Rum
• Kentucky Owl
• The Wiseman
• Cenote Tequila
• Villa One
• Se Busca Mezcal
• Tulchan Gin
• Gator Bite Rum Liqueurs Source

Related: Struggling travel company files for Chapter 11 bankruptcy