Chicken Soup for the Soul Entertainment, Redbox's parent company, has filed for Chapter 11 bankruptcy, The Verge reported, following a month of defaulted loans, vehicle repossession, and missed payroll.
Redbox's Parent Company's DIP Loan Filing
According to court filing and media reports, the media company's $970 million debt has affected its employees, who have not received payment since June 21 and have been without health insurance since May.
"Overnight we filed for Chapter 11 bankruptcy protection," the message seen by the Deadline said. Employees were informed of the debtor-in-possession (DIP) loan filing late Friday, a type of loan allowing companies to reorganize after filing for bankruptcy to secure additional working capital to meet payroll and other operational expenses.
Missed Payments and Payroll for Over a Week
CEO Bill Rouhana affirmed that he and management team members have been working tirelessly to finalize a financing arrangement that will facilitate the resumption of cash flow. Rouhana hoped to fund the delinquent payroll by Monday and promised to provide an update by Friday. The Deadline reported that Rouhana expects benefits to be reinstated within two weeks.
However, one senior executive said that despite employees initially being informed that direct deposits would occur over the weekend or on Monday instead of the scheduled time on Friday, no updates regarding the status of pay have been cascaded since Friday.
Chicken Soup for the Soul Entertainment's Chapter 11 Filing
According to online records, Chicken Soup for the Soul Entertainment on Friday filed for bankruptcy protection, followed by Redbox Entertainment the next day, disclosing $970 million debts against $414 million valued assets and also listed debts owed to several entities, including Universal Studios ($16.7 million), Sony Pictures Home Entertainment ($9.1 million), Lionsgate ($4.6 million), BBC Studios Americas ($9 million), Walgreens ($5 million), and Walmart ($4.1 million). In 2023, the company reported a significant net income loss of $636 million, The Wrapreported.
Redbox and Chicken Soup are known for operating free, ad-supported streaming services across various platforms. According to media reports, smaller studios, streaming platforms, and smart TV manufacturers like Vizio and Plex are among other creditors listed in the filing.
Redbox's parent company also owes money to landlords, the vendors from which it rents its car fleet, and various other creditors, including a wide range of entities in Hollywood.
Chicken Soup for the Soul Entertainment has faced dozens of lawsuits for unpaid bills since it acquired Redbox in 2022, taking on $325 million in debt. Chicken Soup tried to settle one of these lawsuits with NBCUniversal recently but failed to make the first agreed-upon payment, resulting in a court order to pay the entire $16.7 million balance.
The company also faced challenges exacerbated by the Hollywood writers' and actors' strikes, which led to a decline in physical disc rentals. As a result, the company missed payments to vendors and filmmakers, prompting several to initiate lawsuits.
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