Stoli Group USA and its Kentucky Owl American whiskey unit have filed for bankruptcy protection in the United States, citing a two-month cyber attack as a major factor in the decision.

Kentucky Owl currently has about 29,000 barrels of bourbon being aged at a contractor-owned storage facility in Bardstown, Kentucky, according to court documents.

Both companies are US-based subsidiaries of the Stoli Group, which is not bankrupt, however the companies are faced with $84 million in debt.

Global CEO Chris Caldwell said in a bankruptcy-related filing that lower demand for spirits and other types of alcohol after the pandemic and “increased costs and inflation” had played a part in the decision to seek bankruptcy protection.

Stoli Group USA also faced a data breach and ransomware attack in August 2024 that caused severe disruptions to its global business, forcing it to rely on manual bookkeeping for critical business activities.

Systems disrupted by the cyberattack are expected to come completely back online “no earlier than in the first quarter of 2025,” Caldwell said.

According to Reuters Stoli has been embroiled in a decades-long legal battle over the Russian government’s attempt to reclaim ownership of vodka brands that were privatized in the 1990s.

Russia’s government has attempted to bring “politically motivated” criminal charges against Stoli Group’s owner, Yuri Shefler, and seize Stoli’s assets, according to court filings.

In July 2024, the Russian government seized the company’s last two distilleries in the country and labelled Stoli Group as “extremists” over their opposition to Russia’s invasion of Ukraine, according to court documents. 

The filing comes at a critical time for Kentucky Owl, as it is currently constructing the Kentucky Owl Park, which will comprise a distillery, visitor centre and bottling centre, in addition to rick houses and a restaurant.

Caldwell said entering bankruptcy will provide debtors with a “breathing spell and reprieve and the runway for a chapter 11 plan process that will allow the debtors to restructure their balance sheets and emerge from bankruptcy as leaner, stronger entities”.