After the end of the Covid-19 pandemic, the spirits industry has faced financial problems that continue to mount.
Among the reasons for the financial crisis are the lingering effects of the COVID-19 pandemic, rising operating costs due to inflation, declining demand for alcoholic beverages, and legal issues.
A parade of distilleries marched into bankruptcy court in 2025, including Dorchester, Mass.-based craft spirits producer Boston Harbor Distillery, which filed for Chapter 11 bankruptcy protection on March 31, seeking to reorganize its whiskey, rum, gin, liqueurs, and distills businesses.
Boston Harbor’s filing was followed by Portland, Ore.-based House Spirits Distillery LLC, the 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.
Right behind House Spirit Distillery and Boston Harbor was San Antonio-based whiskey brand Devil’s River Distillery LLC, which filed for Chapter 11 bankruptcy protection on May 1, 2025, to reorganize its business and continue operations.
Other distillery bankruptcies last year included SVG 26 LLC, 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 5288y Distilling Corporation, which filed in 4.7.4. 2025.
Ohio-based AM Scott Distillery LLC also filed for Chapter 11 bankruptcy on Dec. 22 to reorganize.
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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 into Chapter 7 liquidations on Jan. 11 after failing to reach an agreement with their senior creditors on terms that would allow them to emerge from Chapter 11.
Control and management of the U.S. entities will be transferred to a court-appointed trustee, who will oversee the liquidation process, according to a Stoli Group USA statement.
Stoli Group USA and affiliate Kentucky Owl originally filed for Chapter 11 bankruptcy reorganization on November 27, 2024, facing severe financial distress after defaulting on more than $78 million in secured loans from Fifth Third Bank NA.
A subsidiary of the Luxembourg-based Stoli Group, which produces and produces vodka, bourbon and other spirits for sale in the U.S. and worldwide, blamed multiple challenges to its Chapter 11 filing, according to court documents.
The New York-based lender 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.
According to an announcement by company CEO Chris Caldwell, the company also cited a loan dispute with Fifth Third Bank in August 2024 and a serious data breach and ransomware attack.
The announcement said the company had been in a 23-year legal battle with the Russian government for the right to privatize Stolichnaya and Moskovskaya vodkas it bought in the 1990s after the fall of the Soviet Union, costing tens of millions of dollars in court costs.
Russian President Vladimir Putin issued an executive order in March 2000 restoring and protecting the Russian state’s rights to vodka trademarks that had been privatized in the 1990s.
More bankruptcies:
The Russian government seized Russia’s last two Stoli distilleries in July 2024 in connection with the Russia-Ukraine war, after the company was designated as an extremist and engaged in marketing activities to provide humanitarian aid and support Ukraine refugees, the announcement said.
“For more than 25 years, the Stoli Group has been involved in a protracted legal dispute with the Russian state over brand ownership and control,” the company said in a statement. “Those pressures have intensified dramatically 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
5288 Distilling Corporation, October 14, 2025
AM Scott Distillery LLC, December 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 quickly followed by the seizure and nationalization of Stoli’s state-of-the-art distillery, an asset integral to the company’s global manufacturing footprint,” the statement said.
The Stoli Group was founded in 2013 and includes several signature brands including Stoli Vodka, Elite 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 preferred source by clicking here.
