Redbox Parent Company Chicken Soup for the Soul Entertainment Files for Chapter 11 Bankruptcy Protection
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 of the Delaware court filing in a message to employees in the early hours of Saturday.
The filing comes after the company faced delinquent payroll and suspended benefits, which were first reported last week. Chicken Soup for the Soul Entertainment has been in financial distress over the past year, particularly after acquiring Redbox in a debt-heavy deal valued at $375 million in 2022.
The company’s net losses widened to $636.6 million in 2023 from $111.2 million in the prior year, according to an SEC filing earlier this month. The filing also warned that bankruptcy was a potential outcome if the company failed to secure funding.
Chicken Soup for the Soul Entertainment had made a series of acquisitions following its initial public offering in 2017, including acquiring streaming service Crackle from Sony and taking over 1091 Pictures, Screen Media, and TV production outfit Sonar Entertainment. The company had built itself into one of the top players in free, ad-supported streaming, but faced challenges as the Redbox deal and the impact of the pandemic on the media business took a toll.
Now, it will be up to a Delaware bankruptcy court to determine how the company moves forward and whether it can come out on the other side. Secured creditors like banks will be first in line to be paid, while unsecured creditors including vendors will be next. The company’s total debt is at $970 million, with unsecured creditors listed in the bankruptcy filing including Universal Studios, Sony Pictures, Lionsgate, Walmart, Vizio, Warner Bros., and Paramount Pictures.
Shareholders are usually left holding the bag in Chapter 11 cases, with CSSE’s stock already in danger of being delisted by the Nasdaq. The company’s stock closed Friday trading at 19 cents a share, down 7% for the day, giving the company a market value of just $6.3 million.
The media business has seen a number of Chapter 11 filings in the past couple of years, with companies like Vice Media, Audacy, and Regal Cinemas parent Cineworld resorting to bankruptcy. It remains to be seen how Chicken Soup for the Soul Entertainment will navigate this challenging financial situation and what the future holds for the company.
