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

After months of financial struggles, Redbox parent company Chicken Soup for the Soul Entertainment has filed for Chapter 11 bankruptcy protection. The company announced the news in a message to employees in the early hours of Saturday.

The filing comes after a series of challenges for the company, including delinquent payroll and suspended benefits. The company has been facing financial distress since acquiring Redbox in a debt-heavy deal in 2022. The Hollywood studio pipeline was also constricted by strikes in 2023, further impacting the decline of physical disc rentals.

In an SEC filing earlier this month, Chicken Soup for the Soul Entertainment reported net losses of $636.6 million in 2023, up from $111.2 million in the previous year. The company warned that bankruptcy was a potential outcome if funding could not be secured.

The Chapter 11 filing will now be reviewed by a Delaware bankruptcy court to determine the company’s future. Secured creditors will be first in line to be paid, followed by unsecured creditors, including major companies like Universal Studios, Sony Pictures, and Warner Bros. The total debt listed in the filing is $970 million.

Shareholders are typically left with losses in Chapter 11 cases, and CSSE’s stock has already been in danger of being delisted by the Nasdaq. The stock closed at 19 cents a share on Friday, down 7% for the day, giving the company a market value of just $6.3 million.

The media industry has seen several Chapter 11 filings in recent years, with companies like Vice Media, Audacy, and Cineworld resorting to bankruptcy. It remains to be seen how Chicken Soup for the Soul Entertainment will navigate this challenging financial situation and emerge from bankruptcy protection.