Ransomware hangover, Putin grudge blamed for vodka maker's bankruptcy
- Reference: 1733387411
- News link: https://www.theregister.co.uk/2024/12/05/putin_ransomware_stoli_group/
- Source link:
Charles Caldwell, CEO at Stoli USA and Kentucky Owl (KO), told the bankruptcy court in Dallas, Texas, that they faced more than $84 million in debts.
Among the various factors adding to the subsidiaries' financial difficulties, he revealed that Stoli Group is still reeling from a "data breach and ransomware attack" back in August, which hasn't been claimed by any known crime group.
[1]
The incident "caused substantial operational issues throughout all companies within the Stoli Group, including Stoli USA and KO, due to the Stoli Group's enterprise resource planning (ERP) system being disabled and most of the Stoli Group's internal processes (including accounting functions) being forced into a manual entry mode."
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Caldwell suggested that the affected systems are still not back online fully, saying they should be restored no later than Q1 2025.
Compliance issues arose as a result, namely related to the subsidiaries' reporting requirements to lenders.
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In addition to softened demand for hard alcohol products following the COVID-19 pandemic, and increased costs related to a weakened [5]global economy , the Stoli Group said its longstanding legal battle with Putin's government came at a great cost to the company.
"Dozens of millions" have been spent on the company's 23-year litigation with Putin's authorities, who believe Russia has a claim to the Stolichnaya and Moskovskaya brands.
Stoli Group was bought by Yuri Shefler in 1997 following the Soviet Union's collapse but shortly after Putin came to power in 1999, he signed an executive order in March 2000 that aimed to reclaim the country's ownership of the now-privatized vodka trademarks.
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The fallout permanently forced Shefler out of Russia following his alleged persecution and the "fabricated criminal charges" leveled against him.
Since then, Stoli Group moved to Luxembourg and the owner – now a UK citizen – has been an outspoken critic of Putin's invasion of Ukraine.
Russia branded Shefler and Stoli Group "extremists" in July 2024 because of their support for Ukrainian refugees, prompting Putin to seize two company distilleries, the last of the company's Russia-based assets, worth an estimated $100 million.
[7]Major energy contractor reports 'limited' access to IT after ransomware locks files
[8]Severity of the risk facing the UK is widely underestimated, NCSC annual review warns
[9]Data on 760K workers from Xerox, Nokia, BofA, Morgan Stanley and more dumped online
[10]Russia arrests one of its own – a cybercrime suspect on FBI's most wanted list
All of these "atypical events" combined have led to a worsened financial condition at the company. Caldwell [11]said management "acted diligently and aggressively" to address both subsidiaries' operational and liquidity challenges, but it hasn't been enough to reverse its fortunes.
Caldwell also alluded to a fractured relationship with the companies' lender, which he said in a [12]declaration to the court [PDF] had refused requests for additional funds to be released.
Separate [13]documents show the subsidiaries owe six-figure sums to at least 30 different companies including marketing agencies, accountancy businesses, and professional sports teams.
The filing of the chapter 11 cases, which would provide protection from creditors while the companies reorganize, was "necessary to maximize value for the benefit of all creditors," the CEO said.
The revelation follows a similar case in October when Jerico Pictures, the company behind data brokerage National Public Data (NPD), [14]also filed for bankruptcy .
NPD was the target of a [15]digital heist in June when USDoD posted billions of individuals' data online. Naturally, a litany of class actions followed, but given the company's ultra-lean makeup, with assets only amounting to around $75,000 at the upper end of estimates, any damages awarded to claimants would be in fractions of cents. ®
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[7] https://www.theregister.com/2024/12/03/us_energy_contractor_englobal_ransomware/
[8] https://www.theregister.com/2024/12/03/ncsc_annual_review/
[9] https://www.theregister.com/2024/12/03/760k_xerox_nokia_bofa_morgan/
[10] https://www.theregister.com/2024/12/02/russia_ransomware_arrest/
[11] https://cases.stretto.com/public/x388/13367/PLEADINGS/1336711292480000000024.pdf
[12] https://cases.stretto.com/public/x388/13367/PLEADINGS/1336711292480000000024.pdf
[13] https://cases.stretto.com/public/x388/13367/PLEADINGS/1336711272480000000274.pdf
[14] https://www.theregister.com/2024/10/09/national_public_data_bankrupt/
[15] https://www.theregister.com/2024/08/05/national_public_data_lawsuit/
[16] https://whitepapers.theregister.com/
Finest Latvian vodka
They make vodka. Putin, you do not have a worldwide grip over vodka. It's fermented potato. Anyone can do that.
So you or I could mash potato and call it say, Grey Goose? But it isn't fermented potato anyway.
Stoli Group was bought by Yuri Shefler in 1997 following the Soviet Union's collapse but shortly after Putin came to power in 1999, he signed an executive order in March 2000 that aimed to reclaim the country's ownership of the now-privatized vodka trademarks.
It's a.. bit more complicated than that, and a fascinating tale of IPR use & possibly abuse, along with a dash of irony-
https://en.wikipedia.org/wiki/Stolichnaya#Trademark_ownership_and_production_rights
Along with being a bit of a relic of the Cold War. So Pepsi wanted to break into the Soviet market, the ruble couldn't be converted, so they did a swap deal getting rights to distribute Stolichnaya in the US and elsewhere. Then along came SPI and their claim to the brand, which has been argued in courts around the world ever since, with SPI often losing. But SPI traded heavily on their version of Stolichnaya being 'Russian', which lead to fun things like this-
In July 2013 columnist Dan Savage joined gay bars and clubs and called for a boycott of Stolichnaya and other Russian vodkas.
Even though Stolichnaya was really Latvian.. Although it was sometimes possible to get confused when there were 2 almost identical bottles of Stolichnaya on off-licence shelves, except for some small print. At least with another famous IPR dispute, identifying real Budweiser vs the inferior knock-off was a lot easier given the distinctly different branding. But then 2014 happened, creating more problems for SPI-
As of 2007 fermentation of Stolichnaya starts with Russian winter wheat and rye grains and pure glacier water and takes about 60 hours.
Ah, those famous Latvian glaciers, rising majestically from the East European plains. Ah, marketing. But then sanctions came, making it hard to import authentic Russian wheat & rye.. but SPI Stolichnaya was still 'Russian'. And then more marketing-
Stolichnaya's global distributor Pernod Ricard responded by insisting that it is an authentic Russian vodka, because nothing is added or removed during the bottling.
Err.. right. Pernod Ricard should try distributing their own version of a Cornish pasty and see how far they get. But the irony is that in trying to claim to be 'authentic Russian vodka', it's still Latvian. And despite forced rebranding to 'Stoli', potential customers still assumed it really is 'Russian' vodka and boycotted it due to the Ukraine thing.
Re: Finest Latvian vodka
I was going to post something along the lines of "sits back and waits to see how long it takes the Putin ass lickers to turn up" but I see you beat me to it.
Do you get a bonus for speed?
Extremists
What a joke.
They make vodka. Putin, you do not have a worldwide grip over vodka. It's fermented potato. Anyone can do that.
You really need to get over yourself.