Courtesy of Redbox
More than 1,000 Chicken Soup for the Soul Entertainment employees are now out of work after the company converted its bankruptcy case to a Chapter 7 liquidation.
Call it Deadbox.
In a worsening situation for physical media, Redbox is closing after more than two decades of providing DVD rental services from thousands of kiosks across the US.
The Redbox chain of 24,000 DVD rental kiosks and its streaming service will close after its parent company, Chicken Soup for the Soul Entertainment, converted its Chapter 11 bankruptcy case to a Chapter 7 liquidation on Wednesday. With the move to liquidate its assets, all Chicken Soup for the Soul Entertainment employees are now unemployed and will not receive severance or additional benefits. As of the end of June, the company said it had 1,033 employees.
Redbox’s business had been in decline for more than a decade before Chicken Soup for the Soul Entertainment bought it in 2020. Its revenue peaked in 2013 at $1.97 billion, and the chain once operated more than 43,000 kiosks in the U.S. and Canada that carried movies, TV shows and games.
On June 28, CSSE filed for Chapter 11 reorganization, with total debts of $970 million and consolidated assets of $414 million as of March 31, 2024. Its creditors include Universal Studios Home Entertainment, Sony Pictures Home Entertainment, Warner Bros. Home Entertainment, Paramount Pictures, Lionsgate, BBC Studios Americas, Walgreens, Walmart, and Vizio.
On Wednesday, Judge Thomas M. Horan of the U.S. Bankruptcy Court for the District of Delaware, who is overseeing Chicken Soup for the Soul’s bankruptcy case, granted the company’s request to move into Chapter 7 liquidation. “There’s no way to continue to pay employees, to pay any bills,” Horan said, according to the Wall Street Journal. He added that a bankruptcy trustee would be appointed to investigate whether funds held in a trust for employees were misused. “1,000 people are going to lose their jobs and they’re not even going to get paid for the work they do,” the judge said.
Chicken Soup for the Soul Entertainment had failed to pay employees and vendors for at least four weeks prior to its Chapter 11 filing. In court documents, HPS, the company’s primary lender, has alleged gross mismanagement by the company. Chicken Soup for the Soul Entertainment Chairman and CEO Bill Rouhana Jr., in a statement supporting the bankruptcy petition, claimed the company’s financial woes were caused in part by its lenders’ “refusal” to fulfill their obligations, resulting in defaults and/or terminations of contracts across key content and service providers.”
Chicken Soup for the Soul Entertainment closed its acquisition of the struggling Redbox business in August 2020, in a deal valued at $370 million. With the acquisition, Chicken Soup for the Soul Entertainment assumed Redbox’s $359.9 million in debt. In a statement, Rouhana said CSSE’s ability to service Redbox’s debt “is based on a partial return to pre-COVID levels in the volume and cadence of theatrical releases available to the company for its kiosk network, as well as cost synergies. Corresponding demand for physical kiosk rentals is expected to return to approximately one-third of 2019 levels.”
Publicly traded Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul LLC, which publishes a popular book series and produces pet foods under the Chicken Soup for the Soul brand name.
In addition to Redbox, Chicken Soup for the Soul Entertainment operates Crackle and other streaming services and produces, acquires and distributes films and TV series through its subsidiaries, Screen Media and Chicken Soup for the Soul TV Group.
