Redbox Parent 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, Chicken Soup for the Soul Entertainment, the parent company of Redbox, has filed for Chapter 11 bankruptcy protection. The company announced the 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. The company has been grappling with financial difficulties following a debt-heavy deal in 2022 to acquire Redbox for $375 million. The Hollywood studio pipeline was further constricted by the dual strikes in 2023, leading to a decline in physical disc rentals. Additionally, some vendors and filmmakers had gone unpaid, with some filing lawsuits against the company.

In an SEC filing earlier this month, Chicken Soup for the Soul Entertainment reported a net loss of $636.6 million in 2023, up from $111.2 million in the previous year. The company had warned of the possibility of bankruptcy if it failed to secure funding.

The company’s journey to bankruptcy began with a series of acquisitions following its initial public offering in 2017. It acquired streaming service Crackle from Sony, as well as 1091 Pictures, Screen Media, and TV production outfit Sonar Entertainment. The company had built itself into a major player in free, ad-supported streaming, but faced challenges as the streaming landscape evolved.

Now, the Delaware bankruptcy court will determine the company’s path forward and whether it can emerge from Chapter 11. The media industry has seen several Chapter 11 filings in recent years, with companies like Vice Media, Audacy, and Cineworld resorting to bankruptcy.

Under Chapter 11, secured creditors will be prioritized for payment, followed by unsecured creditors. Shareholders, including those of Chicken Soup for the Soul Entertainment, may face losses as the company navigates its bankruptcy proceedings. The company’s stock has already been struggling, with shares closing at 19 cents on Friday.

As Chicken Soup for the Soul Entertainment enters Chapter 11 bankruptcy protection, the future of the company and its subsidiaries, including Redbox, remains uncertain.