McIlhenny Company’s claims against Stoli Group (USA), LLC were dismissed with prejudice, ending the adversary proceeding over the TABASCO®-inspired packaging for Stoli Halapeno Vodka. The dismissal stipulation also dissolved the February 2026 preliminary injunction as to Stoli, directed release of McIlhenny’s injunction bond, and required each side to bear its own fees and costs.

The dismissal implements the settlement approved by the court on July 1 and effective immediately under the settlement order. The agreement required no cash consideration, exchanged broad mutual releases—including McIlhenny’s potential administrative-expense claims—and permanently barred Stoli from manufacturing, marketing, or distributing the accused product or using the prohibited trade dress, as detailed in the settlement motion. The estate therefore eliminated trial, damages, and administrative-priority exposure without a cash payout, preserving resources for creditors while surrendering future use of the disputed product presentation.