Sale of bankrupt Kentucky bourbon distillery stalls. What happens now?
AI-generated summary reviewed by our newsroom.
- Withdrew sale motion after receiving 39 NDAs and nine offers.
- Debtors to file amended liquidation plan to enable asset sales.
- Slump, weak exports and 16.1M-barrel glut hurt bourbon buyers.
Troubled Kentucky bourbon distillery Luca Mariano had been working through a potential sale process in bankruptcy court.
But on April 7, it abruptly pulled the plug, filing a motion to withdraw from the sale. No reason was given.
The distillery and its parent company have been in bankruptcy since last year, with about $35 million in debts. In December, they filed a motion to establish bidding procedures and schedule an auction and sale of all assets of the newly built distillery in Danville, including about 6,000 barrels of bourbon.
According to the filing on April 7, “the debtors, through their professionals have contacted 172 known parties, a combination of known strategic buyers, including fast-growing whiskey brands and large contract distilleries, private equity groups, liquidators and real estate investors.”
The property was also advertised for sale in the Wall Street Journal as well as in Kentucky.
“To date, the debtors have 39 executed nondisclosure agreements, conducted 11 site visits and received nine offers ... with others expressing interest in some or all of the debtors’ assets,” Luca Mariano said.
Despite these efforts, “the debtors believe, in an exercise of their business judgment, that the prudent course of action, is to withdraw the motion at this time while continuing to market their assets for sale,” Luca Mariano said.
“The debtors also will file an amended plan of liquidation within the next 14 days to implement a sale structure for some or all of their assets,” the distiller said.
The sale will come at a difficult time in the whiskey industry: Whiskey sales domestically are down, as are exports, which have been crippled by President Donald Trump’s trade war.
Meanwhile, Kentucky distillers are sitting on a record 16.1 million barrels.
And the contract distilling business — one potential market for Luca Mariano — is down significantly.
MGP Ingredients, which just announced it is idling two Kentucky distilleries for at least a year, said in February that its contract whiskey business was down by more than 50%.
One of Kentucky’s largest contract distillers, Lofted Spirits, which owns Bardstown Bourbon Co. and Green River Distilling, laid off the head distiller at Green River and layoffs have been rumored at both distilleries.
And a federal judge in the Texas bankruptcy of Kentucky Owl said last year that the market for barrels of bourbon is so “dismal” that he nixed a plan to force the bank to take bourbon to pay off debt.
And in Tennessee, the receiver for Uncle Nearest whiskey told shareholders in January he had received “no acceptable offer” for the distillery and brand, which is allegedly $200 million in debt.
Another troubled Kentucky distillery — Garrard County Distillery — may be on its way to a transfer to Sazerac but last week contractor Doss & Horky objected to Sazerac’s motion to order a master commissioner’s sale. The two parties are scheduled to be heard by Garrard County Circuit Judge Hunter Daugherty on May 12.
