Redbox's owner files for Chapter 11 bankruptcy protection after missing payments and payroll

Redbox’s parent company, Chicken Soup for the Soul Entertainment, has filed for bankruptcy protection following a series of financial challenges. The filing, made overnight Friday, comes after a tumultuous month in which the DVD rental company defaulted on loans, faced repossession orders for its cars, and missed payroll for employees.

The company informed employees late Friday about the filing and the pursuit of a debtor-in-possession loan, which would provide the necessary working capital to meet payroll obligations. However, securing the loan remains uncertain. Employees have been awaiting paychecks since June 21st, and the company has promised to reinstate health insurance that lapsed in May.

Chicken Soup for the Soul Entertainment’s bankruptcy documents reveal significant debts to various retailers, major Hollywood studios, smaller studios, streaming platforms, and smart TV manufacturers. Notable creditors include Walmart, Walgreens, Universal, Sony, Lionsgate, Warner Bros, the BBC, Vizio, and Plex. Additionally, the company owes money to its landlords and the vendor providing its car fleet.

The financial troubles escalated after Chicken Soup acquired Redbox in 2022, taking on $325 million in debt. The company has faced over a dozen lawsuits for unpaid bills, recently settling with NBCUniversal only to miss the first payment of the agreed-upon settlement, leading to a court order for the full $16.7 million balance. The bankruptcy filing indicates a total debt of $970 million.

The filing marks a critical juncture for Chicken Soup for the Soul Entertainment as it seeks to reorganize and stabilize its operations. The outcome of securing the debtor-in-possession loan will be pivotal in determining the company’s ability to continue its services and support its employees.