Stoli Group's U.S. Subsidiaries File for Bankruptcy Amid Ransomware Attack and Russian Asset Seizure
The U.S. subsidiaries of Stoli Group have declared bankruptcy following an August ransomware attack and the confiscation of the company's last distilleries in Russia by authorities.
Impact of the Cyberattack
Chris Caldwell, President and Global Chief Executive Officer of Stoli USA and Kentucky Owl, stated that the August cyberattack severely disrupted the company's IT systems, including its enterprise resource planning (ERP) platform. Key details include:
- The ransomware attack forced manual operations across the company.
- Critical processes, such as accounting, were significantly affected.
- Full recovery of IT systems is not expected until early 2025.
“In August 2024, the Stoli Group's IT infrastructure suffered severe disruption in the wake of a data breach and ransomware attack," Caldwell noted. "The attack caused substantial operational issues throughout all companies within the Stoli Group, including Stoli USA and Kentucky Owl.”
The incident had far-reaching consequences:
- Stoli's U.S. subsidiaries were unable to provide financial reports to lenders.
- Lenders claimed the subsidiaries defaulted on a $78 million loan.
Seizure of Russian Assets
In July 2024, just a month before the cyberattack, Russian authorities seized the group’s last two distilleries in the country, valued at $100 million. The seizures were linked to:
- Yuri Shefler, the founder of Stoli Group, and the company being designated as "extremists."
- Humanitarian relief efforts and marketing initiatives to support Ukrainian refugees amid the ongoing conflict in Ukraine.
Long-Running Legal Disputes
Stoli Group has spent tens of millions of dollars battling a legal case with Russian state firm FKP Sojuzplodoimport over rights to the Stolichnaya and Moskovskaya vodka trademarks. This legal struggle has spanned 23 years and multiple jurisdictions, including the United States.
- The dispute originated from a March 2000 executive order by President Vladimir Putin to "reinstate and protect the state's rights" in vodka trademarks.
- The trademarks were acquired by private enterprises during the 1990s.
Political Repercussions
Yuri Shefler faced political fallout for his criticism of the Putin regime:
- In 2002, Shefler fled Russia due to politically motivated charges.
- He later gained asylum in Switzerland and British citizenship after Russia's extradition demands were dismissed in the 2010s.
The Stoli Group's challenges highlight the intersection of cybersecurity vulnerabilities, geopolitical conflicts, and long-standing legal disputes. As the company navigates the aftermath of these events, its future remains uncertain amidst ongoing global and operational pressures.