Westward Whiskey, a trailblazer in the American single malt whiskey scene, has hit a rough patch and filed for Chapter 11 bankruptcy. Based in Portland, Oregon, the company, officially known as House Spirits Distillery, is using this legal move to restructure its operations and tackle what its founder and CEO, Thomas Mooney, calls “significant liquidity challenges.” The filing, made in the U.S. Bankruptcy Court for the District of Delaware under subchapter V, is designed to help small businesses like Westward streamline their finances, keep control of their operations, and plan for a stronger future. While the news might sound alarming, Westward’s leadership is optimistic, viewing this as a necessary step to ensure the brand’s long-term success in a competitive and ever-changing spirits market.
A Pioneer in American Single Malt
Founded in 2004, Westward Whiskey was one of just 30 craft distilleries in the U.S. at the time, a period when the craft spirits movement was still in its infancy. Over the past two decades, the brand has carved out a reputation as a leader in American single malt whiskey, a category that only recently gained formal recognition. Westward prides itself on being the top independent producer in this space, trailing only behind bigger names like Stranahan’s (owned by Proximo Spirits), Bulleit (owned by Diageo), and Clermont Steep (owned by Suntory). Its commitment to quality has earned it accolades and a loyal following among whiskey enthusiasts.
In 2018, Westward caught the attention of Distill Ventures, a Diageo-backed accelerator program that invests in promising craft spirits brands. The partnership fueled a nationwide expansion, helping Westward bring its unique whiskeys to more consumers across the U.S. But the road hasn’t been without bumps, and recent challenges have pushed the company to rethink its strategy.
Why Bankruptcy? The Challenges Westward Faces
The decision to file for Chapter 11 wasn’t made lightly. According to court documents, Westward has been grappling with a perfect storm of financial pressures. One major issue is a broader decline in demand for bottled spirits, a trend that’s hit the industry hard in the two years following the COVID-19 pandemic. Consumers aren’t buying as much whiskey as they once did, and Westward has felt the pinch.
On top of that, the company has been dealing with rising costs driven by inflation and global economic uncertainty. Everything from raw materials to labor has gotten pricier, making it harder to keep operations running smoothly. To make matters worse, Westward overinvested in production capacity during better times, expecting demand to keep climbing. It ramped up whiskey production, hired more staff, and leased a large warehouse to store its growing inventory. But when sales didn’t match expectations, the company found itself with thousands of unsold barrels and facilities that were sitting mostly empty.
Court filings reveal that Westward’s leadership has been working hard to turn things around. They’ve slashed monthly expenses from over $1 million to under $300,000 through aggressive cost-cutting measures. But despite these efforts, the company’s financial situation remained shaky. Restrictions in its operating agreement also made it tough to secure outside funding—until recently, when those limits were lifted. Now, Westward is actively exploring new financing options to help it weather the storm.
Diageo’s Role and the Distill Ventures Shift
Westward’s ties to Diageo, through its Distill Ventures investment, add another layer to the story. Diageo still holds a minority stake in Westward, but last month, the global spirits giant announced it would stop bringing new brands into the Distill Ventures program. The decision led to job cuts at Distill Ventures and sent ripples through the craft spirits world, affecting other brands like Denmark’s Stauning, Australia’s Starward, Japan’s Kanosuke, and England’s Fielden—all of which had received Distill Ventures backing.
For Westward, Diageo’s step back means it can no longer count on the accelerator for growth capital. Thomas Mooney addressed this in a statement, saying that while Diageo remains a shareholder, Westward is now looking to other sources for funding, including its founders and potential outside investors. Mooney also hinted that Diageo might be looking to sell its stake, though he was careful not to speak for the company.
What Chapter 11 Means for Westward
Filing for Chapter 11 under subchapter V gives Westward a chance to hit the reset button. This type of bankruptcy is tailored for small businesses, allowing them to negotiate with creditors, restructure debts, and keep running their operations without losing control. Westward’s goal is to use this process to cut “burdensome contracts” and rework its business plan to better fit today’s market.
In the coming months, the company plans to submit a reorganization plan aimed at protecting jobs and ensuring it can keep operating as a going concern. Mooney emphasized that Westward’s day-to-day operations won’t be disrupted—its distillery will keep producing whiskey, its tasting room will stay open, and its products will remain available on store shelves.
“We’re confident that Westward has a bright future,” Mooney said in a statement. “This restructuring is about positioning us to compete and win in the marketplace as it exists today, not as it was in the past.” He pointed to challenges like declining spirits demand, inflation-driven cost increases, and market access barriers for independent producers as key drivers behind the filing. But he also stressed that Westward’s core business remains strong, with growing consumer interest and a solid foundation to build on.
Westward’s Current Position and Future Potential
Despite its financial woes, Westward is in a unique position to rebound. Court documents highlight that the company’s distillery can produce the equivalent of 50,000 nine-liter cases of whiskey annually, with a potential sales value of over $25 million at current prices. Its current inventory includes more than 6,800 barrels, enough to support over 170,000 cases in the future. If Westward can hit its growth targets, it could see a compound annual growth rate of more than 60% over the next five years.
The ultra-premium whiskey market—where bottles sell for $60 or more—is another bright spot. This segment is worth $839 million annually and grew by 4.6% last year, even as cheaper whiskeys saw a 3.2% decline. Westward is already making strides in key markets like California, where its sales jumped 16.1% compared to the ultra-premium category’s 15.6% growth. The brand is also seeing success in Oregon, Australia, and Taiwan, with plans to deepen its presence in these regions.
Looking ahead, Westward has big ambitions. It wants to become the most celebrated luxury American whiskey and crack the top 10 for bottles priced above $75. Its strategy includes leaning on its core range, releasing quarterly innovations through its whiskey club, and capitalizing on its award-winning reputation. With a maturing inventory and a scalable sales model, the company believes it’s well-equipped to achieve these goals.
Beyond Whiskey: A Diversified Future
Westward’s distillery isn’t just built for whiskey. It has the capacity to produce over 100,000 nine-liter cases of gin or other clear spirits each year, opening the door to new opportunities. The company has a proven track record in this space, having created Aviation American Gin, which it sold to Davos Brands in 2016. That brand, now owned by Diageo and famously backed by actor Ryan Reynolds, showcases Westward’s ability to innovate beyond whiskey.
Because of this expertise, Westward sees itself as a prime partner for anyone looking to launch a new gin brand. It’s also exploring contract distilling as a way to bring in additional revenue while it restructures.
A Legacy of Resilience
Westward Whiskey’s bankruptcy filing is a candid acknowledgment of the challenges facing the craft spirits industry. But it’s also a testament to the brand’s resilience and determination to adapt. By taking control of its financial future through Chapter 11, Westward is positioning itself to not only survive but thrive in a market that’s tougher than ever.
For fans of American single malt whiskey, there’s reason to stay hopeful. Westward’s story is far from over, and with its strong inventory, talented team, and clear vision, it’s poised to come out of this process stronger than before. As Thomas Mooney put it, this is about building a Westward that can “compete and win” for years to come.
