Kentucky Bourbon Distillery Seeks Sale Amid $34.5M Bankruptcy Just Months After Construction

A Kentucky bourbon distillery that completed construction just months ago is now headed for sale after a federal bankruptcy judge approved a process to address more than $34.5 million in unpaid debt, the Lexington Herald-Leader reported Thursday.

Luca Mariano Distillery in Danville will be offered to bidders following an order from U.S. Bankruptcy Judge Paul R. Hage that came through on Wednesday. The sale follows negotiations with lenders and local businesses that hold liens tied to construction and financing of the project. Depending on the final terms, the sale could include the distillery itself, the underlying real estate and more than 6,000 barrels of bourbon currently aging in a rickhouse on the site.

The distillery’s parent company sought bankruptcy protection in July 2025, shortly before a Boyle County court hearing that could have forced a public auction to satisfy unpaid construction debts. Luca Mariano Distillery and LMD Holdings later joined the bankruptcy case in November. Court records show the company owes more than $34.5 million in total, with most of that debt held by SummitBridge, which acquired the original loans from Truist Bank.

Several Kentucky contractors and agricultural lenders are also listed among the largest creditors. They include Danville-based builder Doss & Horky, which is owed more than $2 million, along with Farm Credit of Elizabethtown and Farm Credit Leasing of Louisville, each owed more than $2 million. Other claims come from Keystone Industrial, Schardein Mechanical, Insulation Solutions and Hayslett Mechanical, according to the Lexington Herald-Leader.

Under the court-approved timeline, bids must be submitted by Feb. 27. The debtors are authorized to advertise the sale in a national outlet such as The Wall Street Journal to reach potential buyers beyond Kentucky. If a private sale does not move forward, the court has also approved a potential auction of the assets in early March. Any proposed sale would require final approval at a March 10 hearing in U.S. Bankruptcy Court in Detroit.

Luca Mariano Distillery was founded by Francesco Viola, who said last summer that the company intended to reopen following the bankruptcy filing. The brand entered the market with sourced whiskey and planned to begin distilling its own bourbon in 2025 after completing the Danville facility. Construction finished last summer, but the company ran out of capital before full production began.

In July, Viola said the bankruptcy was filed “to maximize the value of the assets for all stakeholders. Luca Mariano Distillery and LMD Holdings have a successful business model, have weathered the prior economic challenges in our industry, and are poised to emerge successfully, ideally with the support of its employees, customers, community and creditors,” according to the Herald-Leader.

The distillery’s financial collapse reflects broader strain across Kentucky’s bourbon industry, which has slowed after years of rapid expansion. Declining domestic demand and weaker exports have led producers to cut back on production, pause projects and reduce staff. In December, Jim Beam confirmed that its Clermont distillery would shut down operations for all of 2026.

Luca Mariano is not alone. Garrard County Distillery in Lancaster was placed into receivership last year amid $2.2 million in liens and remains closed, while Truist Bank has claimed more than $26 million in debt tied to the facility.

Similar pressures are playing out beyond Kentucky. Uncle Nearest, based in Tennessee, has entered receivership after defaulting on more than $100 million in loans. Kentucky Owl and its parent company, Stoli Group, remain in bankruptcy after a judge rejected a plan to repay more than $78 million by selling aging bourbon barrels, citing a stalled whiskey market.