The alcoholic beverage industry has faced significant distress in 2024 with various companies filing for bankruptcy to reorganize their businesses.
Several vodka, gin, and whiskey distillers, as well as breweries, have taken trips to bankruptcy court to arrange restructurings of debt and sales of assets.
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The craft distillery industry had been in a boom era, expanding from 75 companies in 2006 to 2,283 in 2022, according to the American Distilling Institute. But a shakeout seems to be occurring in 2024, as several distillers filed for bankruptcy.
Related: Struggling fast-food restaurant chain files Chapter 11 bankruptcy
Colorado-based Lee Spirits Co., a distiller of premium gin, vodka, and liqueurs, on March 8 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Colorado after shutting down all operations four days earlier.
The debtor said it could not overcome the prolonged impact of the Covid-19 pandemic and “the ever-changing industry landscape.”
Montana Distillery, which produces a dozen varieties of vodka, gin, and whiskey, on April 29 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Montana, four years after relocating to another city to hopefully cut expenses and survive.
The distillery made it almost four years before negative economic factors pushed the company to file bankruptcy.
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Popular vodka distiller Never Forget Brands, which manufactures GameDay Vodka and Spiked canned vodka cocktails, on July 10 filed for Chapter 11 bankruptcy facing judgment liens from the National Football League’s Buffalo Bills, owed $560,000, and New England Patriots affiliate Kraft Sports and Entertainment, owed $450,000.
Also, iconic vodka brand seller and distributor Stoli Group USA and affiliate Kentucky Owl on Nov. 27 filed for Chapter 11 bankruptcy reorganization facing severe financial distress after defaulting on over $78 million in secured debt owed to Fifth Third Bank NA.
Finally, a key company related to beverage makers that manufactures the aluminum cans that many alcoholic beverage and soft drink companies use, fills them with liquid products, and distributes them, has filed for bankruptcy.
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Vobev files for Chapter 11 bankruptcy, seeks a sale of assets
Beverage manufacturing company Vobev filed for Chapter 11 bankruptcy, with plans to name a stalking-horse bidder on an asset purchase agreement for a sale of substantially all of its assets and seek debtor-in-possession financing to fund operations during its bankruptcy case.
Related: Major trucking company files for Chapter 11 bankruptcy
The Salt Lake City-based debtor which produces, fills, and ships beverage cans for sparkling water, juices, spritzers, energy drinks, and alcoholic beverages, filed its petition in the U.S. Bankruptcy Court for the District of Utah on Dec. 9, seeking to reorganize its business.
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The debtor reported $500 million to $100 million in assets and liabilities in its petition. It listed $476 million in debt, which included $402 million in funded secured debt obligations and $74 million in unsecured debt, according to a declaration from Chief Transformation Officer Allan Boyko.
Vobev began construction of its beverage production facility in 2020 during the Covid-19 pandemic but faced the effects of global supply chain issues. Delays in procuring equipment resulted in cost overruns and delays in the company’s ability to ramp up production capabilities.
The delays caused financial distress, requiring the debtor to refinance its existing debt in April 2023 and obtain additional capital to complete its facility. By October 2023, the company had exhausted the additional capital, production remained insufficient, and the company needed more funding.
In November 2023, the debtor’s lenders provided $40 million in additional term loans, but the company burned through that as well and needed even more funding. Over the past year, the debtor’s term loan lenders provided $94 million in funding.
By late 2023, the production facility was fully operational, but the company faced economic distress. The company in June 2024 hired advisers to either raise more capital or sell the company’s assets.
The company began marketing the company for sale before filing its petition, which produced a viable offer to purchase the company subject to a bidding process.
The debtor is finalizing an asset purchase agreement that it plans to file with the bankruptcy court, as well as a motion for approval of a $115.3 million debtor-in-possession financing loan. The DIP includes $37.25 million in new money and a rollup of $78.1 million in prepetition loans.
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