Kentucky Owl and Stoli Group USA: $88.5M Liabilities and Trustee-Led Wind-Down

Kentucky Owl, LLC and Stoli Group (USA), LLC — the U.S. spirits group that owns the Kentucky Owl brand — entered chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas (Dallas Division) on November 27, 2024, under lead case number 24-80147 before Judge Scott W. Everett. What began as a debtor-in-possession reorganization has become a trustee-led wind-down: after the debtors moved in January 2026 to convert their cases to chapter 7, senior secured lender Fifth Third Bank opposed conversion and the parties instead agreed to install chapter 11 trustees for each debtor.

The case now runs on the consensual use of Fifth Third's cash collateral rather than DIP financing, and its economic center is a brokered liquidation of the Kentucky Owl bourbon barrel inventory. Two chapter 11 trustees — Claudia Z. Springer for Kentucky Owl and Patrick Patterson for Stoli Group (USA) — coordinate the wind-down under hard plan milestones, with a chapter 11 plan acceptable to Fifth Third due June 5, 2026 and a confirmation order due by July 31, 2026. Monetization is now live — the May 2026 operating report booked roughly $4.69 million in bourbon inventory-sale proceeds — but the June 5 plan-filing milestone passed with no chapter 11 plan or disclosure statement on the indexed docket, leaving a live cash-collateral compliance question ahead of the July 31 confirmation and termination date.

Debtor(s)	Kentucky Owl, LLC and Stoli Group (USA), LLC (jointly administered)
Court	U.S. Bankruptcy Court, Northern District of Texas (Dallas Division)
Case Number	24-80147
Petition Date	November 27, 2024
Judge	Hon. Scott W. Everett
Chapter 11 Trustees	Claudia Z. Springer (Kentucky Owl); Patrick Patterson (Stoli Group USA)
Secured Lender	Fifth Third Bank, National Association
Claims Agent	Stretto, Inc.

Open the public case profile for docket context, hearings, advisors, and plan updates.

From Reorganization to Trustee-Led Wind-Down

Following the November 2024 filings, the debtors operated as debtors-in-possession with a chief restructuring officer, Steven R. Wybo, and Foley & Lardner LLP as bankruptcy counsel, with Patty Tomasco appearing for the debtors and debtors-in-possession. An Official Committee of Unsecured Creditors formed early in the case and selected Brown Rudnick LLP as lead counsel on December 31, 2024, with Kane Russell Coleman Logan PC as Texas co-counsel. The cases became contested in January 2026, when the debtors moved to convert to chapter 7 liquidation after failing to reach a restructuring agreement with their senior lender. Stoli Group attributed the conversion to converging geopolitical and market pressures, citing unsuccessful negotiations with lenders to reorganize the U.S. business as a going concern. Fifth Third Bank opposed conversion and sought appointment of chapter 11 trustees instead.

The parties reached a negotiated resolution that averted immediate chapter 7 liquidation. The Office of the U.S. Trustee was directed to appoint separate chapter 11 trustees for each debtor, and the court entered the Order Approving Appointment of Chapter 11 Trustee on March 2, 2026, designating Claudia Z. Springer as trustee for Kentucky Owl, LLC and Patrick Patterson as trustee for Stoli Group (USA), LLC. The trustees became effective as of the appointment date, March 12, 2026, and a special meeting of creditors for both debtors was noticed on March 11, 2026. The trustee appointment, rather than a confirmed plan, became the gating event around which the remainder of the case has been built.

The distress narrative predates the conversion fight. Public reporting tied the original November 2024 filings to liquidity constraints, a cyberattack on Stoli's SAP system that the debtors said caused financial-reporting failures and undermined Fifth Third Bank's confidence, sanctions-related geopolitical exposure on the Stoli side, ongoing legal disputes with the Russian government over the Stoli brand portfolio, and a broader decline in U.S. spirits demand and rising costs. Kentucky Owl was one of three Kentucky whiskey distilleries to file for bankruptcy during a period of industry overproduction and heavy capital investment in new facilities, exemplified by Stoli's stalled $150 million Kentucky Owl Park distillery plan in Bardstown. The debtors reported liabilities of $50 million to $100 million at filing. The Statement of Financial Affairs identifies the cyberattack as a cause of distress, noting it affected the availability of the debtor's books and records beginning in January 2020 and again in August 2024.

Fifth Third Co-Liability and the $88.5 Million Balance Sheet

The consolidated Summary of Assets and Liabilities filed December 30, 2024 reports total assets of $64,396,268 against total liabilities of $88,550,578, with secured claims of $84,042,692, priority unsecured claims of $725,212, and nonpriority unsecured claims of $3,782,674. The balance sheet is insolvent on its face, and the bulk of value sits in inventory rather than going-concern operations.

The dominant creditor is Fifth Third Bank, National Association, which holds an aggregate $78,374,334 secured claim comprising $41,033,894 under Stoli USA's revolving credit facility and $37,340,441 under Kentucky Owl's revolving credit facility. Schedule D and Schedule H entries indicate the two debtors are co-liable on the Fifth Third facilities, which ties the Kentucky Owl wind-down to the Stoli USA wind-down at the lender level even though each estate has its own trustee. Fifth Third is the prepetition senior lender and the "Lender" for cash-collateral purposes.

The two other secured creditors are storage- and inventory-related. Bardstown Bourbon Company, LLC holds a $5,623,289 secured claim as the debtors' primary bourbon storage facility and asserts a warehouseman's interest in the inventory it holds; Bardstown later filed Claim No. 128 for $6,382,364 in prepetition arrearage under a 2021 supply agreement. Brindiamo Group LLC holds a smaller $45,069 secured claim. Among unsecured creditors, Amber Beverage Group — the Stoli affiliate that comments publicly on the case — is owed roughly $250,000, and distribution counterparties such as Republic National Distributing Company appear among the larger trade claims.

Cash Collateral Use and Fifth Third Adequate Protection

No DIP facility was put in place at any point. Both the original debtor-in-possession period and the trustee-led period rely on consensual use of Fifth Third's cash collateral, with the bank receiving adequate protection in exchange. The trustee-era framework was approved in two steps: an interim stipulation and agreed order entered April 22, 2026, followed by the Final Stipulation and Agreed Order authorizing the chapter 11 trustee's use of cash collateral, approved at the May 11, 2026 hearing and entered May 13, 2026.

The final order grants Fifth Third adequate protection in the form of replacement liens, superpriority claims, and payment of post-petition interest at the default rate under the prepetition loan documents, subject to Bankruptcy Code section 506(b). A "Trustee Carveout" places budgeted professional fees for the trustee's professionals — Hughes Hubbard & Reed, Ferguson Braswell Fraser Kubasta, NOVO Advisors, and others — senior to Fifth Third's liens within the budgeted amounts, and Bardstown's post-petition storage charges are budgeted as a permitted expense and carved out from setoff or recharacterization claims.

The order sets a termination date at the earliest of an event of default, consummation of a sale of substantially all assets, full repayment of the prepetition indebtedness, or July 31, 2026. It also embeds the case's controlling plan milestones as events of default: the trustee must file a chapter 11 plan acceptable to Fifth Third by June 5, 2026, and a confirmation order acceptable to the lender must be entered by July 31, 2026. Those dates give the wind-down a defined runway of roughly two and a half months from final approval. The May 11 hearing was held before Judge Everett, who granted the motion on the record; the official transcript was filed May 20, 2026, with electronic public access deferred to August 18, 2026 under standard transcriber restrictions.

Bourbon Inventory Sale Procedures and the Time and Tasks Broker

The trustee's economic plan centers on a controlled, broker-driven monetization of the Kentucky Owl bourbon inventory rather than a single going-concern sale. The governing authority is the Order Approving Sale Procedures, entered April 23, 2026 on the trustee's emergency 363(f) sale motion. The subject assets are over 35,000 barrels and approximately 19,000 proof gallons of bourbon whiskey spanning production years 2013 through 2025, plus additional whiskey, inventory, and work-in-process.

The procedures order establishes three tiers of sale authority keyed to aggregate selling price, inclusive of fees, taxes, and commissions. Sales up to $5 million may be consummated without further court order, subject to a five-day sale notice and the objection rights of Fifth Third and Bardstown. Sales above $5 million and up to $20 million may proceed on the same notice-and-objection basis. Any sale above $20 million, or any sale of all or substantially all of the debtor's assets, requires a separate motion and a court approval order. Sale-notice parties entitled to the five-day objection window include the U.S. Trustee, Fifth Third Bank, Bardstown Bourbon Company, the creditors' committee, and any other party asserting a lien or interest. If Bardstown objects, a sale cannot proceed until the objection is withdrawn, resolved, or approved by the court — giving the storage counterparty effective veto leverage over every individual barrel sale. The procedures also bar the trustee from selling causes of action and preserve Fifth Third's credit-bid rights.

To run the sale channel, the trustee retained Time and Tasks LLC as exclusive inventory broker by order entered April 23, 2026, on a commission-only basis with no hourly consulting fees. The retention application sets a 7% commission on sales to buyers Time and Tasks identifies or refers, and 3.5% on sales to buyers it did not source. Court approval under section 328(a) authorizes payment of those commissions on each individual sale without further orders, which is consistent with the serial-transaction design of the three-tier procedure.

Bardstown Storage, Green River Barrels, and Title Clearing

The sale machinery only works if the inventory stays in place and the estate can convey clean title, and two trustee filings in late May 2026 address exactly those predicates. On May 28, 2026, the Kentucky Owl trustee filed an emergency motion for a new Barrel Aging Services Agreement with The Bardstown Bourbon Company, dated May 20, 2026. The agreement is the operational successor to the prepetition 2021 supply agreement and covers storage and aging services for approximately 29,000 barrels — a subset of the 35,000-plus barrels under the sale procedures order, reflecting that not all inventory sits at Bardstown.

Under the Barrel Aging Services Agreement, monthly storage charges are based on end-of-month barrel counts at age-tiered pricing, with invoices issued by the fifth of each month on net-15 terms and additional services requiring prior trustee approval. The agreement acknowledges Bardstown's $6,382,364 prepetition claim (Claim No. 128) but expressly reserves "all other rights related to the claim," so the new agreement governs go-forward services without prejudice to the prepetition dispute. The trustee asserted that continuous storage of the 29,000-barrel inventory is pivotal to the monetization plan and that relocating it would generate significantly higher costs. The trustee's hearing agenda for the June 4, 2026 hearing reported that no objections had been received as of June 3, 2026. Following the unopposed June 4 hearing, the court entered the order approving the Barrel Aging Services Agreement on June 5, 2026, authorizing the trustee to perform all obligations under the agreement.

A second tranche of inventory sits outside Bardstown, and its title was clouded. On May 29, 2026, the trustee filed a Rule 9019 motion to compromise with The Spirits Group over barrels stored at Green River Distilling Company. Under a January 12, 2022 sales agreement, the debtor purchased and paid for the barrels, but the Green River warehouse receipts were never updated to reflect the debtor's ownership, and TSG continued paying storage costs while a warehouse agreement that never closed was pending. The settlement has the trustee pay TSG $21,139 for post-petition storage expenses, allowed as an administrative expense, in exchange for TSG's waiver of $33,066 in prepetition expenses, with TSG cooperating to convert the warehouse receipts so the debtor's ownership vests free and clear. Fifth Third's liens in the purchased barrels are preserved, and the trustee reserves the right to seek contribution from the Stoli Group (USA) estate. No objections were filed by the June 22, 2026 deadline, and the trustee filed a Certificate of No Objection on June 23, 2026. The court entered the order approving the settlement on June 30, 2026, allowing TSG a $21,139.15 administrative expense claim and preserving Kentucky Owl's right to seek contribution from the Stoli Group (USA) estate for the storage expenses.

Trustee and Committee Professionals

The trustee's professional roster was assembled in roughly 30 days after the March appointments. Hughes Hubbard & Reed LLP serves as lead counsel to the chapter 11 trustee, with Kathryn A. Coleman among the lead attorneys; the firm received no prepetition compensation from the debtors and is compensated on standard hourly rates. Ferguson Braswell Fraser Kubasta PC serves as Texas counsel, with bankruptcy attorney rates of $365 to $755 and paraprofessional rates of $165 to $310.

The financial-advisor role provides continuity from the pre-trustee period. NOVO Advisors LLC had been advising on the debtors' restructuring since a 2021 engagement and was retained by the trustee to maintain the 13-week cash-flow model, build budget-versus-actual reporting, and support sale-process modeling, at standard hourly rates. The Final Cash Collateral Order's budget includes line items for both NOVO and Hughes Hubbard fees as Trustee Carveout components.

On claims administration, the trustee retained Stretto, Inc. as claims and noticing agent on an emergency basis, with the retention order entered April 15, 2026. Stretto maintains the claims register for both jointly administered estates ahead of the July 15, 2026 administrative bar date. Together with Time and Tasks as inventory broker, the retention set reflects a wind-down structured around asset monetization and claims processing rather than reorganization.

Committee counsel and the post-trustee fee collapse. The Official Committee of Unsecured Creditors is represented by Brown Rudnick LLP as lead counsel and Kane Russell Coleman Logan PC as Texas co-counsel. Brown Rudnick's fee applications track how sharply committee activity contracted around the trustee appointment. Its Fifth Interim Fee Application, covering January 1 through February 5, 2026 — the conversion fight — sought $438,393.70 in fees plus $9,384.26 of expenses, against a highest billed rate of $2,600 per hour. The First Interim Fee Application for the post-trustee period from February 5 to May 31, 2026 sought only $5,910.00, split across cash-collateral, asset-sale, hearing, and contested-matter categories. The drop tracks the committee's reduced role after the chapter 11 trustees took over case management in March 2026. Objections to both applications are due July 20, 2026.

The July 1 fee wave. A cluster of interim and final fee applications filed June 30 and July 1, 2026 fixes the scale of professional costs built up before and after the trustee transition. Trustee Springer's first interim fee application seeks $66,225.59 in compensation and $3,635.09 in expenses for February 19 through May 31, 2026, billed at an hourly rate of $1,095 subject to the section 326(a) statutory cap. Committee financial advisor M3 Advisory Partners, LP filed a fourth interim fee application for $84,039.50 in fees and $3,471.20 in expenses covering October 1, 2025 through February 5, 2026, with investigations and litigation support the largest category at $46,105. Kane Russell Coleman Logan filed a fourth interim application for the same period seeking $32,376.50 in fees and $1,913.28 in expenses, plus a separate first interim trustee-era application for only $813.50 in fees. Objections to the M3 and KRCL applications are due July 21, 2026, and to the Trustee's application by July 24, 2026.

Debtor-side final numbers are larger. Foley & Lardner's fifth interim and final fee application seeks final allowance of $5,895,159.34 in fees and $121,725.02 in expenses for the entire case, November 27, 2024 through May 31, 2026, reporting $5,210,488.02 already paid, $806,396.34 outstanding, and a $30,000 retainer it seeks to draw down. Riveron Management Services' final fee application seeks $3,760,694.30 in fees and $32,594.51 in expenses for November 27, 2024 through February 28, 2026, reporting $3,531,167.28 paid, $262,121.53 outstanding, and a $70,000 retainer draw-down request. Combined, the two final applications put the debtor-side professional cost of the case at roughly $9.9 million. Objections to both are due July 27, 2026.

Operating Reports and the Monetization Inflection

The Kentucky Owl monthly operating reports document a near-dormant operating posture and a significant books-and-records disruption during the trustee transition. The January 2026 report, filed April 22, 2026 and signed by William R. Patterson as trustee for the jointly administered estates, shows beginning cash of $3,446,596 falling to an ending balance of $646,525, reflecting a $2,500,000 outgoing wire on January 30, 2026 and a $300,000 transfer on January 6. The report, prepared by Harney Partners on a "best possible approximation" basis, discloses that on or about February 18, 2026 the debtors lost full access to their parent company's accounting system, leaving the estate without its primary books and records ahead of the trustee transition — a disruption that connects to the cyberattack disclosure in the Statement of Financial Affairs.

The trustee's first two reports, both filed May 21, 2026, confirm the static posture. The February 2026 report shows cash receipts of $211,501 and disbursements of $212,917, with an ending balance of $645,109 covering the partial period from the trustee's effective date. The March 2026 report reports zero cash receipts, $915 of disbursements, and an ending balance of $644,193, with post-petition payables, past-due payables, and taxes all at $0. Kentucky Owl's operating cash is held at Fifth Third Bank across two accounts, and Trustee Springer attests that bank reconciliations were performed on a timely basis. The near-zero activity is consistent with the case architecture: estate value sits in the bourbon inventory, the Time and Tasks broker channel is the only material economic activity expected during the cash-collateral runway, and sale proceeds flow to Fifth Third as adequate protection rather than accumulating in the operating account.

The April and May 2026 reports mark the transition from dormancy to active monetization. The April 2026 report shows zero cash receipts, $226,451 of disbursements reflecting the start of professional-fee outflows, and an ending balance of $417,743, with no asset sales outside the ordinary course. The May 2026 report is the first material monetization month: cash receipts of $4,692,468, essentially all from bourbon inventory sold outside the ordinary course, produced net cash proceeds of $4,367,046 after $325,423 in third-party payments, against $1,205,154 of disbursements, lifting the ending cash balance roughly nine-fold to $3,905,057. Professional-fee payments in the month included Hughes Hubbard & Reed (~$584,589), Time and Tasks (~$325,323 — the broker's commission on the inventory sales), NOVO Advisors (~$148,202), Ferguson Braswell Fraser Kubasta (~$14,758), and Stretto (~$7,449). The ~$325,000 paid to Time and Tasks tracks its 7%/3.5% commission structure on roughly $4.69 million of sales, the first hard evidence the broker channel is producing proceeds.

Administrative expense bar date. On June 11, 2026 the court entered an order establishing an administrative expense bar date of July 15, 2026 at 5:00 p.m. Central for administrative expenses incurred from the November 27, 2024 petition date through May 31, 2026. The bar date notice followed on June 12, 2026. The Kentucky Owl trustee, trustee-retained professionals, and parties already paid in full or already on file are carved out; pre-appointment debtor and committee professionals must instead file fee applications with allocation information splitting fees between the Kentucky Owl and Stoli estates, subject to a July 1, 2026 exemption from the allocation requirement. The bar date fixes the administrative-claim universe through May 31, 2026 ahead of any distribution mechanism, and its arrival alongside the first material inventory-sale proceeds marks the case moving from asset monetization toward wind-down accounting.

Key Timeline

Date	Event
November 27, 2024	Kentucky Owl, LLC and Stoli Group (USA), LLC file chapter 11 in the Northern District of Texas
December 30, 2024	Debtors file Schedules and Statement of Financial Affairs
January 2026	Debtors move to convert cases to chapter 7; Fifth Third opposes
March 2, 2026	Order approving appointment of chapter 11 trustees
March 12, 2026	Trustee appointments effective; Time and Tasks broker engagement signed
April 15, 2026	Orders granting retention of Stretto, FBFK, and NOVO Advisors
April 22, 2026	Interim cash collateral stipulation entered; January 2026 MOR filed
April 23, 2026	Sale procedures order entered; Time and Tasks broker retention approved
May 13, 2026	Final Cash Collateral Order entered; termination date set July 31, 2026
May 20, 2026	Trustee and Bardstown execute new Barrel Aging Services Agreement
May 21, 2026	Trustee files February and March 2026 MORs
May 28, 2026	Trustee files emergency motion re: Barrel Aging Services Agreement
May 29, 2026	Trustee files Rule 9019 motion to approve TSG/Green River settlement
June 4, 2026	Hearing on Barrel Aging Services Agreement (unopposed)
June 5, 2026	Order approving Barrel Aging Services Agreement entered; plan-filing milestone passes with no plan on the docket
June 11, 2026	Order establishing administrative expense bar date entered
June 15, 2026	April 2026 MOR filed ($0 receipts; ending cash $417,743)
June 22, 2026	TSG settlement objection deadline passes with no objections
June 23, 2026	May 2026 MOR filed (~$4.69M inventory-sale receipts; ending cash $3.9M); TSG Certificate of No Objection filed
June 29, 2026	Brown Rudnick fee applications filed
June 30, 2026	Court approves TSG/Green River settlement; Trustee Springer, M3 Advisory, and KRCL fee applications filed
July 1, 2026	Foley & Lardner and Riveron final fee applications filed
July 15, 2026	Administrative expense bar date (claims through May 31, 2026)
July 20, 2026	Objection deadline on Brown Rudnick fee applications
July 21, 2026	Objection deadline on M3 Advisory and KRCL fee applications
July 24, 2026	Objection deadline on Trustee Springer fee application
July 27, 2026	Objection deadline on Foley & Lardner and Riveron fee applications
July 31, 2026	Milestone: confirmation order due; cash-collateral termination date

Frequently Asked Questions

Who is the claims agent for Kentucky Owl and Stoli Group (USA)?

Stretto, Inc. serves as the claims and noticing agent, retained by the chapter 11 trustees on an emergency basis with the retention order entered April 15, 2026. Stretto maintains the claims register for the jointly administered Kentucky Owl and Stoli estates, which face a July 15, 2026 administrative expense bar date set by the June 11, 2026 bar date order.

Is the Kentucky Owl case a reorganization or a liquidation?

It is a trustee-led wind-down. After the debtors moved to convert to chapter 7 in January 2026, a settlement with Fifth Third Bank instead installed chapter 11 trustees who are liquidating the bourbon inventory through a brokered sale process. No reorganization or going-concern path appears in the indexed filings, and the Final Cash Collateral Order contemplates a liquidating plan.

What is being sold, and how?

The principal asset is the Kentucky Owl bourbon barrel inventory — more than 35,000 barrels spanning 2013 to 2025 production. The trustee monetizes it through private brokered sales by Time and Tasks LLC under a three-tier sale-procedures order, with court approval required only for sales above $20 million or of substantially all assets.

Related ElevenFlo coverage of trustee-led chapter 11 wind-downs and brokered asset monetizations includes Epic! Creations' trustee-run asset sales, the DirectBuy and Z Gallerie liquidation trust, and Heritage Coal's 363 sales and liquidating plan.