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Redbox Parent Company Chicken Soup for the Soul Entertainment Files for Chapter 11 Bankruptcy

Chicken Soup for the Soul Entertainment Inc., a media corporation well known for its self-help books and ownership of Redbox DVD rental kiosks, has filed a Chapter 11 bankruptcy. The company’s filing came late on Friday in Delaware having been unable to handle heavy indebtedness.


The company communicated to its employees early on Saturday stating “Overnight we filed for Chapter 11 bankruptcy protection.” This was accompanied by an application for a debtor-in-possession (DIP) loan to be funded through court approval and expected to fund payroll and reinstate medical benefits retroactively to May 14, 2024.


Since they acquired Redbox in April last year, Chicken Soup For the Soul Entertainment has gone under financial distress. This $375m deal meant that the company went deeply into debt.

Furthermore, a studio pipeline slowdown caused by double strikes in Hollywood in 2023 made matters even more complex as well as the continuing decline of physical disk rentals.
Subsequently, vendors and filmmakers have not been paid leading some to sue.


In an SEC filing earlier this month, the company showed net losses that had widened from $111.2 million during the previous year to $636.6 million last year alone. It also stated that if further funding is not secured there is a potential danger of bankrupting.


However William J Rouhana Jr., Chairman noted in his sworn bankruptcy court statement that new content required additional cash but creditors vetoed a new loan facility starving the business of all funds thus ChickeN’. However the borrowing Restriction also means that Redbox had insufficient money to pay for all movies provided by its suppliers – hence operating results did not meet management’s expectations, especially concerning rentals at kiosks.


As part of its bankruptcy process, it plans to sell off some business units and reorganize others. The Chapter 11 process has been funded by $20 million in new debt. Despite the financial turmoil, Chicken Soup for the Soul Entertainment continues to operate approximately 24,000 Redbox DVD rental kiosks across the U.S. and runs Crackle, a no-cost streaming service supported by advertisements. The company’s content library includes 28,000 films and 40,000 episodes of television.


Chicken Soup for the Soul Entertainment started as an expanding book company with happy-go-lucky titles in 1993 before it expanded its operations into film production television programming and video streaming and eventually became a publicly listed firm in 2017.


The Delaware bankruptcy court will now determine the company’s path forward. Vice Media, Audacy, and Regal Cinemas parent Cineworld are some of the media businesses that have filed under Chapter Eleven. In Chapter Eleven secured creditors like banks will come first followed by unsecured creditors such as major studios – Universal Studios, and Sony Pictures among them – and retailers like Lionsgate, Walmart Vizio Warner Bros Paramount Pictures. The total indebtedness of this firm is $970m.


In most cases, shareholders who have already incurred massive losses receive little in Chapter eleven cases typically leaving the majority with nothing at all. Chicken soup for Soul Entertainment’s stock which risked being delisted from Nasdaq closed Friday’s trading at 19 cents per share down by seven percent throughout one day thus putting market value at only $6.3 million.


The company’s bankruptcy will be a real test to see the extent of its restructuring and if it can come out of it stronger than before.

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