Redbox parent company Chicken Soup for the Soul Entertainment shifts bankruptcy filing to Chapter 7

Redbox parent company Chicken Soup for the Soul Entertainment has made a drastic decision to shift its bankruptcy filing from Chapter 11 to Chapter 7, signaling the liquidation of its business. The company, burdened by nearly $1 billion in debt and a pile of unpaid bills, initially filed for bankruptcy protection on June 29. Despite securing a loan to resume paying workers and restore their medical benefits, the company faced a financial roadblock when one of its backers, HPS Investment Partners, declined to provide additional resources.

As a result, Chicken Soup for the Soul Entertainment made a motion to transition to Chapter 7 bankruptcy, which was approved by U.S. Bankruptcy Judge Thomas M. Horan. This decision will lead to the closure of all 24,000 Redbox kiosks and the termination of employees. The details regarding back pay and severance for employees have yet to be finalized, with a town hall meeting scheduled for further discussion.

Former CEO Bill Rouhana has sought legal counsel as the court navigates through various claims about the company’s financial operations. The situation has been described as “heartbreaking” by the company’s lawyer, Richard Pachulski, who acknowledged the efforts made to find a solution.

The downfall of Chicken Soup for the Soul Entertainment, which acquired Redbox in a $375 million deal in 2022, serves as a cautionary tale of financial mismanagement and strategic missteps. Employees, who have been left in a state of uncertainty, express frustration and disappointment over the company’s actions.

The shift to Chapter 7 bankruptcy marks the end of an era for Chicken Soup for the Soul Entertainment, once a promising entity that now faces the harsh reality of financial collapse.