Within a matter of days, 5TH AVENUE Products Trading-GmbH, the exclusive importer of Habanos, found itself in a crisis that threatened its very existence: on 4 September 2026, the company imposed a complete halt to deliveries. The reason for this was a compliance audit – a rigorous legality check carried out by the banks: as the Cambodian businessman Chen Zhi (founder of the Prince Group) is under investigation in the US for money laundering and fraud and is on the EU sanctions list, financial institutions froze all of 5TH AVENUE’s bank accounts due to his indirect stake in the parent company, Habanos S.A.

The article was sent to 5th Avenue Products Trading GmbH in advance for review. Due to the current legal framework and the ongoing proceedings, the company was unable to comment on the content.

Legal requirement and court order

As the company had become insolvent without functioning bank accounts, and as allowing the statutory three-week period to lapse would have constituted a criminal offence, the management filed for insolvency on 8 September 2026. The Waldshut-Tiengen Local Court subsequently ordered provisional insolvency administration on 9 September under file number 4 IN 194/26. Dr André Berbuer, a solicitor from Freiburg, was appointed as the provisional insolvency administrator. Since then, any disposal of the company’s assets has only been valid with the consent of the provisional insolvency administrator. Furthermore, the latter was authorised to collect bank balances and outstanding receivables.

Filing for insolvency also protects employees

By submitting the application in good time, the management not only complied with legal requirements but also secured the necessary scope for action for the company and its workforce. It is only once insolvency proceedings have been officially opened that the provisional insolvency administrator can, in consultation with the Federal Employment Agency, secure employees’ wages. Through what is known as ‘insolvency pay’, wages can be covered for up to three months via the Federal Employment Agency or, where necessary, pre-financed via a bank. This step therefore secures the livelihoods of the employees for the time being and creates the conditions necessary to stabilise business operations in an orderly manner.

What happened?

The background to this is the sanctions against Chen Zhi and their impact on Habanos’s international business. Chen Zhi held an economic stake in Habanos S.A. via a multi-tiered shareholding structure. He is currently facing criminal proceedings in the US on suspicion of wire fraud and money laundering; furthermore, he was initially subject to sanctions by the US and the UK, and, since 30 July 2026, by the European Union as well.

These sanctions affect banks that maintain business relationships with companies within the international Habanos distribution system. At 5TH AVENUE, restrictions on its banking arrangements have meant that the company is unable to accept new orders or deliver goods.

Chen Zhi himself has no direct shareholding in 5TH AVENUE under company law. His connection lies with the international Habanos business. The initial communication to specialist retailers did not specify which specific banking and sanctions-related mechanisms had led to the restriction of 5TH AVENUE’s business activities.

According to the company, it is working with external experts to restore business operations as quickly as possible. It is not yet known how long the restrictions and the insolvency proceedings will last.

What's new?

Banking issues within the international Habanos distribution system have been known for several months. There are now three key new developments:

EU sanctions: Since 30 July 2026, Chen Zhi has also been on the European Union’s sanctions list. This means that a risk previously characterised mainly by American and British sanctions has now become a direct European sanctions issue.

Operational delivery suspension: It has been known since 4 September that 5TH AVENUE has had to scale back its business operations to such an extent that it is unable to accept new orders or dispatch goods.

Insolvency petition: On 8 September, the management filed a formal application for insolvency, following which the Waldshut-Tiengen Local Court ordered provisional insolvency administration on 9 September 2026.

As a result, the impact of the international sanctions issue is felt directly by specialist European cigar retailers.

Why the application for insolvency was legally unavoidable

The opening of provisional insolvency proceedings is directly linked to the statutory time limits under German insolvency law. According to Section 15a of the Insolvency Code (InsO) The management of a limited liability company (GmbH) is legally obliged, in the event of insolvency (section 17 of the Insolvency Code (InsO)) or over-indebtedness (section 19 of the Insolvency Code (InsO)), to act without delay, and at the latest within three weeks (in the event of insolvency) or six weeks (in the event of excessive debt), to file for insolvency.

As 5TH AVENUE’s bank accounts had been frozen due to international sanctions and it was not legally possible to have payment transactions reinstated at short notice, the company had become insolvent. If a managing director allows the statutory three-week period to elapse, he or she is personally liable to prosecution for delaying the declaration of insolvency (section 15a(4) of the Insolvency Code) and is liable under civil law for payments made after the company became insolvent (Section 15b of the Insolvency Code). Filing the petition was therefore a legally mandatory step for the management.

What does the delivery suspension mean for specialist retailers?

5TH AVENUE is the official Habanos distributor for Germany, Poland and Austria, as well as for other cigars from different origins within the Tabacalera range (e.g. VegaFina, Capitol, Flor de Copan, etc.). If the company is unable to dispatch goods, specialist retailers will not receive any new deliveries via this distribution channel for the time being. This does not mean that Cuban cigars are no longer immediately available in Germany, Austria and Poland. Specialist retailers have their own stock levels. How long these will last depends on the individual retailer, the brands and formats available, and the level of demand.

The duration of the disruption is therefore crucial. The situation is hitting exclusive specialist retail concepts such as the Casas del Habano and Habanos Specialists particularly hard, as their business model relies heavily on a steady supply of premium Cuban cigars. Other companies within the international Habanos business have been able to resume their operations, at least in part, following the necessary regulatory approvals or licences. It is not yet possible to assess whether a comparable solution or a restructuring will be achieved for 5TH AVENUE under the direction of the provisional insolvency administrator.

The Chen Zhi case

At the centre of the international sanctions issue is Chen Zhi, founder and chairman of the Cambodian Prince Holding Group. In October 2025, the US Department of Justice brought charges against Chen Zhi for conspiracy to commit wire fraud and money laundering. American investigators accuse him of operating a network of fraud centres in Cambodia through the Prince Group.

According to the US Department of Justice, victims of human trafficking, amongst others, are alleged to have been forced to carry out online fraud there. The proceeds from this are said to have been laundered through complex structures. These are criminal allegations. An indictment does not constitute a conviction.

In parallel with the criminal investigations, the US and the UK imposed sanctions on Chen Zhi and his network of companies. On 30 July 2026, the European Union also added Chen Zhi and the Prince Holding Group to its sanctions list. The EU justifies its measures on the grounds of serious human rights violations linked to scam centres in South-East Asia. For European companies, inclusion on the EU sanctions list is particularly relevant. Since then, banks within the European Union have been required to immediately assess whether funds or other economic resources could directly or indirectly benefit sanctioned individuals or organisations.

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How Chen Zhi is connected to Habanos

The connection dates back to 2020. At that time, Imperial Brands sold its international cigar business. The buyer of the business, which is based outside the US, was Allied Cigar Corporation. The purchase price was 1.04 billion euros. Among other things, the deal included a 50 per cent stake in Habanos S.A. and a 50 per cent stake in Altabana S.L. For a long time, the identity of the financial backers behind Allied Cigar was only partially known to the public.

An investigation by the Financial Times published in early September 2026 traces the ownership structure. According to the report, Chen Zhi controlled 57.1 per cent of the investment vehicle behind Allied Cigar via Simply Advanced Limited. Through this chain of shareholdings, Chen Zhi was calculated to have an indirect economic stake of around 28.55 per cent in Habanos S.A.

Chen Zhi is therefore not directly a shareholder in 5TH AVENUE in his private capacity. What is decisive, rather, is the chain of shareholdings between his investment, Allied Cigar, the international Habanos business and its distribution companies.

What role does Altabana play at 5TH AVENUE?

In Germany, this chain of shareholdings leads to Altabana. According to the information filed with the German Commercial Register, Altabana holds an 80 per cent stake in 5TH AVENUE Products Trading-GmbH. The Villiger Group owns the remaining 20 per cent. The ownership structure changed in 2025. Previously, Altabana held a 55 per cent stake and Villiger a 45 per cent stake in 5TH AVENUE. Consequently, 5TH AVENUE is now clearly majority-owned by Altabana and, under company law, forms part of the international Habanos distribution system.

In its statement of 4 September, 5TH AVENUE itself does not specify which of its shareholders is the subject of the current compliance and sanctions investigation.

Other companies in the Habanos network are also affected

The difficulties are not confined to Germany. The British Habanos importer Hunters & Frankau and companies in the US had already been facing the impact of the sanctions. In those countries, licences or authorisations granted at a later date enabled certain business activities to resume.

Banking problems have also been reported in Asia. In June 2026, Nicotine Insider reported on difficulties at the Pacific Cigar Company (PCC), which distributes Habanos in numerous markets across the Asia-Pacific region. PCC is owned equally by Altabana and Tang Tobacco Limited. According to the trade publication’s research, invoicing has, in some cases, been transferred to Tang Tobacco Limited. This points to an emerging pattern: the sanctions issue is affecting not only individual companies, but also various parts of the international distribution network.

Tabacalera and the EU sanctions

A further development concerns Tabacalera S.L. According to a report by Nicotine Insider dated 5 September 2026, Tabacalera had already informed its distributors in early August that, following the inclusion of Chen Zhi on the EU sanctions list, the company expected to be affected by the consequences of these sanctions. However, according to the trade publication, there has been no explicit official decision regarding Tabacalera’s specific status. The European Commission and the Spanish Ministry of Finance are said to have declined to comment on the specific case.

This means that a significant part of the problem lies with companies and their banks: they must assess whether, within the complex ownership structure, payments or other economic resources could directly or indirectly benefit a sanctioned person.

Sources and transparency

Berlin Consumer Protection Forum – 5TH AVENUE PRODUCTS TRADING-GMBH under provisional insolvency administration (Ref. 4 IN 194/26), 10 September 2026: consumer protection forum.berlin

L’Amateur de Cigare / Cigars-connect – 5TH AVENUE and the suspension of deliveries, 5 September 2026: cigars-connect.com

L’Amateur de Cigare / Cigars-connect – Banking problems faced by European Habanos distributors, March 2026: cigars-connect.com

US Department of Justice – Charges against Chen Zhi, 14 October 2025: justice.gov

Council of the European Union – Sanctions against Chen Zhi and Prince Holding Group, 30 July 2026: consilium.europa.eu

Imperial Brands – Sale of the international cigar business, 27 April 2020: imperialbrandsplc.com

Financial Times – Research into the ownership structure and Chen Zhi, 3 September 2026: ft.com

Nicotine Insider – Pacific Cigar Company and the consequences of the sanctions, 22 June 2026: nicotineinsider.com

Nicotine Insider – Impact on the European distribution network, 5 September 2026: nicotineinsider.com

Here are the official documents and references taken directly from the statute book (Laws on the Internet, published by the Federal Ministry of Justice):

Section 15a of the Insolvency Act – Obligation to file an application & criminal liability

Contents: Sets out the legal obligation of managing directors of limited liability companies (GmbHs) to act without undue delay in the event of insolvency or excessive indebtedness, and at the latest by within three weeks(insolvency) or. six weeks (excessive debt) to file for insolvency. It also sets out the criminal liability for delaying the filing of an insolvency petition if the deadline is missed.

Official source: Section 15a of the Insolvency Act – Legislation on the Internet

Section 17 of the Insolvency Act – Grounds for commencing proceedings: insolvency

Contents: Defines, in legal terms, when a state of insolvency exists (when the debtor is unable to meet payment obligations that have fallen due).

Official source: Section 17 of the Insolvency Code (InsO) – Legislation on the Internet

Section 19 of the Insolvency Code – Grounds for commencing proceedings: over-indebtedness

Contents: Defines ‘excessive indebtedness’ as the ground for the commencement of insolvency proceedings in the case of legal entities (GmbH).

Official source: Section 19 of the Insolvency Code – Legislation on the Internet

Section 15b of the Insolvency Code – Liability for payments made after the company has become insolvent

Contents: Governing the civil liability and obligation to reimburse of directors in respect of payments made after the company has become insolvent.

Official source: Section 15b of the Insolvency Code (InsO) – Legislation on the Internet

Here is the official, statutory and regulatory documentation for the three-month period covered by the insolvency allowance:

Legal basis (Section 165 of Book III of the Social Code):

The statutory entitlement is set out in the Social Code. It states explicitly that employees are entitled to insolvency pay „for the preceding three months of the employment relationship“.

👉 Official source: Section 165 of Book III of the Social Code (SGB III) – Legislation on the Internet

Federal Employment Agency (Information for employers):

The Federal Employment Agency explicitly states on its official website: „Insolvency benefit is paid as a one-off payment covering the last three months prior to the onset of insolvency.“

👉 Source: government authorities: Federal Employment Agency – Information on insolvency payments

Information Sheet 10 from the Federal Employment Agency (PDF):

The Employment Agency’s official guide for employees and insolvency practitioners explains in detail the exact three-month period covered by the assessment and calculation.

👉 PDF source: Information Sheet 10 – Insolvency Pay (Federal Employment Agency)

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