Vodka maker Stoli files for bankruptcy in the US after a ransomware attack

Stoli Group’s U.S. subsidiaries, including Stoli USA and Kentucky Owl, have filed for bankruptcy following a major ransomware attack in August 2024, which crippled the company’s IT systems and halted key operations.

The attack, which targeted Stoli’s enterprise resource planning (ERP) system, forced the company to resort to manual processes for vital functions such as accounting. The company’s president, Chris Caldwell, stated in a court filing on Friday that full recovery of the IT infrastructure is not expected until early 2025.

The ransomware attack significantly disrupted operations across the Stoli Group, affecting its U.S. and global subsidiaries. Key internal processes were rendered inoperable due to the disabling of the ERP platform, creating a cascade of operational issues, particularly in financial reporting. The U.S. subsidiaries could not provide financial updates to their lenders, who subsequently claimed that Stoli USA and Kentucky Owl had defaulted on a $78 million debt.

In addition to the cyberattack, Stoli’s operations faced a significant setback earlier in the summer when, in July 2024, Russian authorities seized two of the company’s distilleries valued at $100 million. This occurred after the Stoli Group and its founder, Yuri Shefler, were designated as "extremists" by the Russian government in response to the company’s support for Ukrainian refugees during the ongoing war. The legal and political turmoil has compounded the company’s financial struggles.

Stoli’s long-running legal battle also remains a significant concern. For over two decades, the company has been embroiled in a complex legal dispute with Russia’s state-run FKP Sojuzplodoimport over the rights to the Stolichnaya and Moskovskaya vodka trademarks. This dispute dates back to 2000 when Russian President Vladimir Putin issued an executive order to reinstate state control over vodka trademarks privatized in the 1990s. The ongoing legal battle has cost Stoli millions of dollars and further strained its operations.

Yuri Shefler, who founded the company, was forced to flee Russia in 2002 after being accused of politically motivated charges that were widely seen as an attempt to silence his criticism of the Putin regime. Shefler sought asylum in Switzerland and gained UK citizenship after Russia’s extradition requests were denied.