Redbox DVD kiosk owner Chicken Soup for the Soul files for bankruptcy

The media company filed for Chapter 11 protection in Delaware late Friday, listing assets and liabilities of at least $500 million each. The filing allows Chicken Soup to continue operating while working through the debt recovery process.

Chicken Soup has struggled to meet its financial obligations after buying DVD rental company Redbox in 2022, court documents say. It took on about $360 million in debt in connection with the deal, a sum that can only be managed if it can get money from the release of the film that is delayed during the pandemic, said Chairman William J. Rouhana Jr. in the bankruptcy court statement. .

Although the film business has also grown slowly, it needs more money to buy and distribute new content, Rouhana said. But the company’s lenders have blocked new loans, starving it of business, according to Rouhana.

That left Chicken Soup “unable to pay for all the movies offered by its suppliers, and the operating results failed to meet management’s expectations, especially for the Redbox kiosk lease, which resulted in insufficient cash flow and working capital to operate the business properly,” Rouhana. said.

The company plans to use its bankruptcy to sell some businesses and restructure others, according to court documents. Raised $20 million in new debt to fund the Chapter 11 process.

Chicken Soup still operates approximately 24,000 Redbox DVD rental kiosks across the US. It also runs Crackle, a free streaming service that relies on ads to make money. The company’s library includes 28,000 movies and 40,000 television episodes, according to court documents.

The Connecticut-based company was founded in 1993 and is known for its feel-good books. Its expansion into film and television programming and video streaming came later, along with a line of premium pet food. It became a publicly traded company in 2017.

A representative for the company declined to comment beyond court requests.

The case is Chicken Soup for the Soul Entertainment Inc., 24-11442, in the US Bankruptcy Court for the District of Delaware.