First Day Hearing 

Presentation 

In re Stoli Group (USA), LLC, et al. (Case No. 24-80146-swell)

United States Bankruptcy Court for the Northern District of Texas

December 3, 2024

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The Debtors and Advisors 

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Stoli Group Background 

• Stoli USA and KO are affiliates and subsidiary companies within the “Stoli Group” (formerly, the “SPI Group”)—a vertically

integrated global network and enterprise headquartered in Luxemburg that manufactures, produces, markets, sells, and distributes

vodka, bourbon, tequila, wine, scotch, rum, ginger beer, and other alcoholic and non-alcoholic beverages throughout the world

(collectively, “Stoli Products”). The Stoli Group participates in over 176 markets worldwide and collaborates with a network of over

two hundred distributors. The Stoli Group boasts a rich heritage dating back to the early part of the last century and utilizes whollyowned and affiliated production facilities located in Argentina, Latvia, Spain, Mexico, the United Kingdom, and the United States to

manufacture and produce the wide variety of Stoli Products that the Stoli Group offers in the marketplace.

• Some of the iconic and well-known brands and Stoli Products within the spirits division of the Stoli Group include Stoli® Vodka, elit®

Vodka, Bayou® Rum, Kentucky Owl®, Wiseman®, Cenote® Tequila, Se Busca® Mezcal, and Tulchan® Gin. In the wine portfolio of

Stoli Products, the Stoli Group’s slate of brands includes Achaval Ferrer® (Argentina) and Arínzano® (Spain), with distribution rights

in Super-Tuscan Ornellaia, Masseto, Luce and CastelGiocondo, under the Tenute Di Toscana Company, and Chateau Miraval and its

family of brands, including Miraval®, Muse®, Studio® and Fleur de Miraval®.

• Pursuant to an executive order of Russian President Vladimir Putin, issued in March 2000 shortly after his coming to power,

prescribing to “reinstate and protect the state’s rights” in vodka trademarks privatized in the 1990s, the Stoli Group has been

defending its rights to the Stolichnaya and Moskovskaya vodka trademarks against Russian state enterprise FKP Sojuzplodoimport

over more than twenty-three (23) years in courts of multiple jurisdictions, including the United States. The Stoli Group has been

forced to spend dozens of millions of dollars on this long-term court battle across the globe with the Russian authorities.

• In August 2024, the Stoli Group’s IT infrastructure suffered severe disruption in the wake of a data breach and ransomware attack.

The attack caused substantial operational issues throughout all companies within the Stoli Group, including Stoli USA and KO, due to

the Stoli Group’s enterprise resource planning (ERP) system being disabled and most of the Stoli Group’s internal processes

(including accounting functions) being forced into a manual entry mode. These systems will be fully restored no earlier than in the

first quarter of 2025.

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Stoli (USA)

• Stoli USA is a wholly owned subsidiary of S.P.I. Spirits (Cyprus) Limited—a limited company formed under the laws of

Cyprus and an entity within the Stoli Group. Stoli USA was formed in February 2013 to serve as the Stoli Group’s sole

and exclusive purchaser, importer, and distributor of finished Stoli Products in the United States market. Prior to the

formation and establishment of Stoli USA, the Stoli Group imported and supplied Stoli Products to the United States

market but did not have an independent distribution and marketing presence within the United States.

• To carry out its designated role within the Stoli Group as the exclusive purchaser, importer, and distributor of finished

Stoli Products in the United States, Stoli USA is party to certain exclusive contracts and agreements with other entities in

the Stoli Group. Those entities largely serve as the manufacturers and producers of finished Stoli Products and own and

hold the intellectual property, marketing, and branding rights associated with the Stoli Products sold and distributed by

Stoli USA. Stoli USA’s contracts and agreements with its affiliates, including licenses and agreements allowing Stoli USA

to utilize trademarks, copyrights, images, and other marketing materials associated with Stoli Products, provide Stoli

USA with the exclusive right to sell and distribute finished Stoli Products in the United States and utilize associated

intellectual property, marketing, and branding rights and materials to do so.

• The vast majority of finished Stoli Products that are shipped from overseas and supplied to the United States market are

imported and sold by Stoli USA directly to regional United States distributors for resale in “open” and “franchise” states

(such as Arizona, California, Colorado, Illinois, and Texas). A smaller portion of finished Stoli Products is imported by Stoli

USA and stored at a third-party distribution center in Baltimore, Maryland, from which deliveries and sales are later

made to “control” states (such as Alabama, Michigan, Ohio, Utah, etc.), likewise through regional distributors.

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Kentucky Owl 

• KO is a wholly owned subsidiary of SPI Worldwide Trade Limited—a limited company formed under the laws of Cyprus

and another entity within the Stoli Group. KO was established in January 2017 as part of the Stoli Group’s desire to enter

a new segment of the spirits industry and initiative aimed at reviving the Kentucky Owl® brand of rye and bourbon

whiskeys, which has roots in the United States dating back to the 1800s. KO produces various batches and iterations of

its ultra-premium whiskeys, including “Batch #11,” “Batch #12,” “Confiscated,” and “The Wiseman ” and also rolls out

limited releases, including “Mardi Gras XO Cask,” St. Patrick’s Edition,” “Takumi Edition,” and “Maighstir Edition.” KO’s

fine whiskeys are included in the vast array of Stoli Products offered and sold by the Stoli Group in the global

marketplace, including Stoli USA in the United States.

• Operationally, KO serves as a holding company for the raw materials used to produce its lines of whiskey. KO has no

direct employees and does not own or operate any production or storage facilities directly. Instead, KO uses the services

of a non-debtor affiliate in Bardstown, Kentucky, to distill whiskey in bulk barrels in accordance with KO’s desired

specifications. Once the product is distilled, the barrels are stored at the third party’s Kentucky facility to age for an

extended period of time until the whiskey within the barrels has fully matured.

• Once the aging process is complete, and as requested by KO, barrels are shipped from the Kentucky storage facility to

KO’s non-debtor affiliate, Louisiana Spirits LLC, where the aged whiskey is mixed, bottled, and transformed from raw

product into finished ready-to-be-sold goods. Pursuant to various exclusive rights contracts and agreements with its

affiliates, KO then sells its finished goods solely to companies within the Stoli Group, which, in turn, distribute and sell

KO’s ultra-premium whiskey products across the world. Notably, though, Stoli USA is the largest purchaser and

distributor of KO’s finished goods.

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Events Leading up to Chapter 11 Filing

• Despite the Debtors’ long history of being a leader in the United States and globally in the alcohol and spirits industry, the Debtors

are currently facing significant balance sheet and liquidity challenges caused by a range of factors. Indeed, over the past several

years, numerous atypical events have put a great strain on the Debtors’ financial condition, including (1) a decline and softening of

demand for alcohol and spirits products post-COVID and especially beginning in 2023 and continuing into 2024, (2) increased cost

and inflation stemming from the overall global economy, (3) the aforementioned severe operational disruption caused by a data

breach and ransomware attack in August 2024 (including issues with compliance by the Debtors with the reporting requirements of

the Lender), and (4) the dispute with the Lender (as explained above), which not only caused liquidity issues, but has also caused

the Debtors to shift their time, energy, and focus on placating the Lender in lieu of focusing exclusively on right-sizing and improving

their operations.

• With all of those challenges accumulating simultaneously, on November 27, 2024, the Debtors elected to file voluntary petitions for

relief under chapter 11 of the Bankruptcy Code, thereby initiating the Chapter 11 Cases. The Debtors determined that the filing of

these Chapter 11 Cases was necessary to maximize value for the benefit of all creditors.

• Additionally, on October 29, 2024, the Lender sent a total of ten (10) letters (the “KO Vendor Letters”) to various trade vendors,

suppliers, and storage providers utilized by KO (collectively, the “KO Vendors”), among other things, (a) informing the KO Vendors,

that KO was in default under the KO Loan Documents and that the Lender did not consent to any of KO’s inventory currently held by

the KO Vendors being sold, removed, transported, or otherwise disposed of by KO or anyone else without the Lender’s prior written

consent; and (b) demanding that the KO Vendors not acknowledge, facilitate, or undertake any further sales, removal,

transportation or other disposition of any KO inventory held by the KO Vendors without the Lender’s prior written consent. The

Lender’s service of the KO Vendor Letters was extremely disruptive and put a significant strain on the Debtors’ operations and

effectively accelerated the necessity of the Debtors’ bankruptcy filings.

• Prior to filing bankruptcy, the Debtors retained its professional team and appointed Steven Wybo of Riveron Consulting, as their

Chief Restructuring Officer.

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Debtors’ Prepetition Capital 

Structure 

• Via that certain Credit Agreement dated October 28, 2022, by and between Debtor Stoli USA and the Lender (the “Stoli Credit

Agreement”), and, together with related loan documents, agreements, or instruments executed in connection with the Stoli Credit

Agreement, and as amended, restated, modified, or supplemented, the “Stoli Loan Documents”), Debtor Stoli was provided a

revolving credit facility in an aggregate amount of $50,000,000 (the “Stoli Revolver”).

• Pursuant to that certain Amended and Restated Credit Agreement dated as of February 3, 2023, by and between Debtor KO and

the Lender (the “KO Credit Agreement”), and, together with related loan documents, agreements, or instruments executed in

connection with the Stoli Credit Agreement, and as amended, restated, modified, or supplemented, the “KO Loan Documents,” and

collectively with the Stoli Loan Documents, the “Prepetition Loan Documents”), Debtor KO was provided a revolving credit facility in

an aggregate amount of $40,000,000 (the “KO Revolver,” collectively with the Stoli Revolver, the “Revolver Commitment”).

• As of the Petition Date, the Debtors’ aggregate principal outstanding funded debt obligations under the Prepetition Loan

Documents total approximately $78,374,334.30 (the “Prepetition Indebtedness”), comprised of (i) $41,033,893.58 under the Stoli

Revolver and (ii) $37,340,440.72 under the KO Revolver, all of which is due and owing under the Prepetition Loan Documents.

• Debtor KO is also a borrower under that certain Loan Agreement, dated November 29, 2017, by and between Debtor KO and SPI

Worldwide Trade Limited, as successor to SPI Group S.a`r.l. (the “Subordinate Lender”), as from time to time amended,

supplemented, restated, or otherwise modified (the “Subordinate Loan Documents”), providing for a delayed draw term loan of up

to $25,000,000 (the “Subordinate Loan”). The Subordinate Loan is unsecured, bears interest at a rate of 3% per annum, and all

amounts borrowed under the Subordinate Loan mature on December 31, 2027. As of the Petition Date, the Debtors owe

$6,151,299.00 under the Subordinate Loan Documents.

• In addition to the Debtors’ outstanding obligations under the Prepetition Loan Documents and the Subordinate Loan Documents,

the Debtors also have unsecured debt obligations, including amounts owed to, among others, trade creditors, vendors, shippers,

and contract counterparties, which are subject in all respects to the Debtors’ rights to dispute.

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Interim Cash 

Collateral Budget

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