House Spirits Distillery LLC, the Portland-based maker of award-winning Westward Whiskey, filed for Chapter 11 bankruptcy protection under Subchapter V on April 6, 2025, in the District of Delaware (Case No. 25-10660). The filing represents another casualty in the craft spirits industry as consumer preferences shift away from traditional whiskey toward canned cocktails and non-alcoholic alternatives.

The bankruptcy reflects broader industry distress. Whiskey sales in America dropped 1.8% to $5.2 billion in 2024. Kentucky is aging a record 14.3 million barrels of bourbon, highlighting potential overcapacity. Multiple distilleries have filed for bankruptcy protection, including Boston Harbor Distillery in March 2025 and Black Button Distilling in July 2025.

Business Overview and Market Position

Founded in 2004 in Portland, Oregon, House Spirits Distillery emerged as one of only about 60 craft distilleries operating in the United States at the time. Operating under the Westward Whiskey brand, the company pioneered the American single malt whiskey category and helped establish the American Single Malt Whiskey Commission in 2016.

By 2015, Westward had become the largest independent distiller of American single malt whiskey. The distillery maintains production capacity of approximately 50,000 nine-liter cases annually, with over 6,800 barrels of aging whiskey inventory. Westward Whiskey Milestone was named Best American Single Malt of 2023 and earned 94 points from VinePair. The company's 2024 Bottled-in-Bond release, distilled in March 2017, represents the oldest Westward with a verifiable age statement at 7 years.

Beyond its flagship Westward brand, House Spirits created significant value through Aviation Gin. Founded in 2006 by distiller Christian Krogstad and bartender Ryan Magarian at House Spirits Distillery, Aviation Gin was sold to Davos Brands in 2016, with proceeds funding expansion of the company's whiskey production capabilities. Following actor Ryan Reynolds' investment in February 2018, Diageo acquired Aviation Gin and Davos Brands for up to $610 million in August 2020, with an initial payment of $335 million and potential additional $275 million based on sales performance.

Pre-Filing Financial Challenges

House Spirits' financial crisis emerged from an ill-timed COVID-era expansion. During the pandemic, Westward expanded operations, significantly increasing bottling capacity and staffing. Post-COVID, the company faced declining spirits demand, rising production costs, inflation, and market access constraints. Overproduction created substantial inventory challenges, with capacity sitting mostly idle despite heavy investments.

Management implemented aggressive cost controls, reducing monthly cash expenditures from over $1 million to under $300,000. CEO Thomas Mooney acknowledged: Though "consumer interest in Westward grew last year, this is a necessary step as we explore financial and strategic alternatives."

Industry-Wide Distress

House Spirits' bankruptcy reflects systemic challenges across the spirits industry. Over 14.3 million barrels of bourbon are aging across Kentucky as of late 2024, representing massive overcapacity built during the previous decade's whiskey boom. The industry has responded with significant workforce reductions: Brown-Forman announced layoffs of ~12% (~648 jobs) in January 2025, Green River Distilling eliminated 26 positions (about a quarter of its workforce), and Diageo paused production at its Lebanon plant through June 2025.

The bankruptcy wave has accelerated through 2024-2025. At least three Kentucky distilleries filed for Chapter 11 protection between July 31 and August 4, 2025, including Bluegrass Barrel Co., Heritage Reserve Distillers, and Boone Hollow Spirits. Garrard County Distilling entered receivership owing $25.89 million to Truist Bank, while LMD Holdings filed Chapter 11 with over $25 million in claims. Trade disputes intensified pressure: Canadian provinces pulled U.S. spirits from shelves in 2025 in response to tariffs.

Chapter 11 Filing Details and Capital Structure

House Spirits filed its voluntary Chapter 11 petition on April 6, 2025, in the U.S. Bankruptcy Court for the District of Delaware, proceeding under Subchapter V with representation by Pashman Stein Walder Hayden PC. Subchapter V provides expedited bankruptcy procedures for small businesses, enabling reorganization while retaining operational control.

Diageo's Distill Ventures invested in Westward on September 12, 2018, acquiring a minority stake while founders retained majority ownership. Notable investors include former NFL quarterback Joe Montana. Secured creditors include KeyBank National Association and First Insurance Funding.

CEO Thomas Mooney emphasized operational continuity:"Throughout this restructuring process, we will continue to operate as usual and bring our world-class whiskeys to our growing consumer base." The company maintains club membership releases during bankruptcy, preserving customer relationships.

Stakeholder Impact and Restructuring Strategy

The restructuring aims to preserve employee jobs while eliminating unsustainable contracts. Direct-to-consumer sales continue through tasting rooms, club memberships, and e-commerce. Management targets positioning Westward as a top 10 American whiskey brand over $75 per bottle. The ultra-premium segment ($60+ per bottle) has shown ~4.6% annual growth.

Industry Outlook

CEO Thomas Mooney maintains optimism despite the bankruptcy: "Westward has a bright future." American single malt whiskey recently received federal standard of identity recognition—the first new standard since bourbon in the 1960s. The category demonstrated 131% growth from 2014-2017. Westward's contract manufacturing capacity for clear spirits exceeds 100,000 nine-liter cases annually, providing revenue diversification.

The restructuring occurs amid fundamental industry shifts. Consumer preferences have moved toward ready-to-drink cocktails and non-alcoholic alternatives. Traditional producers face dual challenges: excess inventory from the previous decade's boom and potentially permanent consumption pattern changes. House Spirits' Aviation Gin sale to Diageo for $610 million demonstrates the founders' brand-building capabilities, suggesting recovery potential if management adapts to new market realities.

Craft distilleries face intensifying competitive pressures. Major producers have implemented workforce reductions and production pauses, while distribution access becomes increasingly constrained. Success for House Spirits depends on aligning production with realistic demand while maintaining premium positioning. The Subchapter V process provides restructuring tools, but the company must navigate an industry landscape fundamentally altered from its initial growth period. For ongoing coverage of bankruptcy proceedings and restructuring trends, visit the ElevenFlo bankruptcy blog.