Redbox Owner Chicken Soup For The Soul Entertainment Files For Chapter 11 Bankruptcy Protection
Redbox parent Chicken Soup for the Soul Entertainment Getty Images
After months of financial struggles, Redbox parent Chicken Soup for the Soul Entertainment has filed for Chapter 11 bankruptcy protection.
The company relayed news of the Delaware court filing in a message to employees in the early hours of Saturday.
“Overnight we filed for Chapter 11 bankruptcy protection,” the message said. “In connection with the filing, we have applied for approval of a debtor in possession [DIP] loan. Upon court approval, we expect payroll to be funded early in the week and funding for this upcoming week’s payroll to also be secured. We also expect to have the funds to reinstate medical benefits back to May 14, 2024 and going forward. We will provide regular updates.”
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Delinquent payroll and suspended benefits, first reported last week by Deadline, became the latest fire for the company to put out. It has been struggling over the past year in the wake of taking on Redbox in a debt-heavy deal valued at $375 million. In addition to the financial burden of the transaction, the Hollywood studio pipeline was constricted by the dual strikes in 2023 and physical rentals also continue to decline. Vendors and filmmakers had gone unpaid and some had filed lawsuits.
The Redbox deal capped off a series of acquisitions since the company’s initial public offering in 2017 as a spinoff from the popular Chicken Soup line of self-help books. The company scooped up streaming service Crackle from Sony and also took over 1091 Pictures, Screen Media and TV production outfit Sonar Entertainment.
It will now be up to a Delaware bankruptcy court to determine how the company moves forward and whether it can come out on the other side. The media business has seen a number of Chapter 11 filings in the past couple of years as Covid added to an already daunting set of business challenges. Vice Media, Audacy and Regal Cinemas parent Cineworld are among those resorting to bankruptcy, with Cineworld managing to continue operating and emerge with many of its theater assets in operation.
Under the Chapter 11 setup, secured creditors like banks will be first in line to be paid, while unsecured creditors like vendors will be next up. Shareholders in most scenarios are the ones left holding the bag. CSSE’s beleaguered stock has already been in danger of being delisted by the Nasdaq. It closed Friday trading at 19 cents a share, down 7% for the day, giving the company a market value of just $6.3 million.