The decline of the video rental store paved the way for today’s streaming services and other alternatives like Redbox. Sadly, however, the DVD rental kiosk chain is apparently going the same way as its predecessors. The parent company of Redbox, Chicken Soup for the Soul Entertainment, has converted its Chapter 11 bankruptcy case to a Chapter 7 liquidation, which means Redbox will be shutting down.
This was shared by Variety, where the outlet explained the company’s decision to make “the move to liquidate its assets.” This means “all of Chicken Soup for the Soul Entertainment’s employees are now unemployed and will not receive severance or extended benefits.” The outlet also adds that “the company said it had 1,033 employees” as recently as late June.
Redbox was purchased by Chicken Soup for the Soul Entertainment in 2020. However, the DVD rental kiosk chain is said to have been declining for years prior to that acquisition. Its highest revenue, $1.97 billion, was recorded in 2013. It was said to have once “operated more than 43,000 kiosks” in both the United States and Canada, according to Variety.
Chicken Soup for the Soul Entertainment’s Chapter 11 reorganization, which was filed on June 28, 2024, is said to include total debts as high as $970 million with “consolidated assets of $414 million as of March 31, 2024.” Variety adds that creditors to the company “included Universal Studios Home Entertainment, Sony Pictures Home Entertainment, Warner Bros. Home Entertainment, Paramount Pictures, Lionsgate, BBC Studios Americas, Walgreens, Walmart and Vizio.”
Judge Thomas M. Horan of the U.S. Bankruptcy Court for the District of Delaware is overseeing the bankruptcy case for Chicken Soup for the Soul. He granted their request to convert to a Chapter 7 liquidation and he issued the following statement via Wall Street Journal:
“There is no means to continue to pay employees, to pay any bills,” Horan said.
After revealing that a bankruptcy trustee will be investigating the potential misappropriation of funds being held in trust for employees, Horan added the following:
“1,000 people are about to lose their jobs and they’re not even going to be paid for work that they did.”
As for the chairman and CEO of Chicken Soup for the Soul Entertainment, Bill Rouhana Jr., he supported the bankruptcy petition and claimed that the company found themselves in this surprising position because of “refusals” from its lenders “to live up to their obligations, resulting in asserted defaults and/or contractual terminations across critical content and service providers.”
As such, we’ll have to see how this situation continues. Stay tuned to ScreenGeek for any additional updates regarding the Redbox shutdown and Chicken Soup for the Soul Entertainment’s bankruptcy as we have them. This is definitely a disappointing time for the entertainment industry and the physical media side of things.