The digital age of movie-watching claimed yet another victim in its years-long fight for viewership domination.
Redbox, the once beloved movie rental kiosk and rival of video store Blockbuster, is shutting down after its parent company filed for bankruptcy.
Chicken Soup for the Soul Entertainment (CSSE) converted its Chapter 11 bankruptcy case to a Chapter 7 liquidation proceeding on Wednesday, after its lenders were unwilling to continue taking the risk of financing the failing business, the Wall Street Journal reported on Wednesday.
Redbox’s 24,000 rental kiosks will be closed as the company moves to liquidate its assets.
Redbox saw an annual revenue of $1.97 billion at its height in 2013 and once had 43,000 kiosks in the US and Canada.
The proceedings come as the company’s top lender, HPS Investment Partners, alleged gross mismanagement including missing payrolls last month which caused the company’s employees to lose their medical benefits, the outlet reported.
The case is being overseen by Judge Thomas Horan of the US Bankruptcy Court District of Delaware.
Horan granted the company’s request to pursue the liquidation proceedings saying, “there is no means to continue to pay employees, to pay any bills.”
“Based on allegations we’ve heard, it’s important that a Chapter 7 trustee be appointed and undertake an appropriate investigation of the company,” Horan added
The entertainment company’s liquidation leaves all 1,033 of its employees jobless and the workers won’t receive any severance or extended benefits.
“1,000 people are about to lose their jobs and they’re not even going to be paid for work that they did,” Horan exclaimed.
CSSE purchased Redbox in 2022 during a $375 million acquisition deal, with the hope of returning to pre-pandemic numbers — but it also took on around $360 million in debt.
The ability to service Redbox was “predicated on a partial return to pre-COVID levels in the number and cadence of theatrical releases that were available to the company for its kiosk network,” Chairman and CEO William Rouhana said according to Variety.
In its Chapter 11 reorganization filings on June 28, CSSE listed $970 million in total debts and consolidated assets of $414 million from March 31, 2024, Variety reported.
The company still owes money to Walmart and Walgreens — stores where some of its kiosks were located — and media companies including Warner Bros. Home Entertainment and Sony Pictures Television.
Other creditors listed in the filing were Universal Studios Home Entertainment, Paramount Pictures, Lionsgate, BBC Studios Americas and Vizio.
Rouhana, who controls close to 80% of the shares, unilaterally dissolved the company’s board of directors except himself before he resigned from the CEO position on June 24.
The board was reconstituted following the June 28 bankruptcy fillings in hopes of finding lenders to finance a sale process.
Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Sould LLC, which is not a part of the bankruptcy proceedings.
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