Chicken Soup for the Soul Entertainment Declares Bankruptcy Amid Debt and Financial Strains

Chicken Soup for the Soul Entertainment, the parent company of Redbox, has filed for Chapter 11 bankruptcy due to approximately $970 million in debt and $414 million in assets. The company, which owns over 27,000 distinctive red DVD rental kiosks, owes millions to entertainment and retail giants like Universal Studios, Sony Pictures, and Walmart. Founded in 1993, Chicken Soup for the Soul initially as a publisher of inspirational books, later expanding into the entertainment sector under CEO William J. Rouhana Jr. The company's acquisition of Redbox in 2022 led to significant financial challenges.

In a surprising turn of events, Chicken Soup for the Soul Entertainment, the parent company of popular DVD rental service Redbox, has filed for Chapter 11 bankruptcy protection [1]. The filing, made on June 28, 2024, in the U.S. Bankruptcy Court for the District of Delaware, was necessitated by the company's inability to pay its employees and vendors for over a week [1].

According to the company's bankruptcy petition, Chicken Soup for the Soul Entertainment had a total debt of $970 million and consolidated assets of $414 million as of March 31, 2024 [1]. Its cash and equivalents were reported to be a meager $4.9 million, including $4.6 million of restricted cash [1].

The list of creditors owed by Chicken Soup for the Soul Entertainment includes entertainment and retail giants such as Universal Studios Home Entertainment ($16.7 million), Sony Pictures Home Entertainment ($9.1 million), BBC Studios Americas ($9 million), Walgreens ($5 million), Lionsgate ($4.6 million), Walmart ($4.1 million), Vizio ($2.75 million), Warner Bros. Home Entertainment ($2 million), and Paramount Pictures ($1.96 million) and Paramount Home Entertainment ($1.2 million) [1].

The company's financial difficulties can be traced back to its acquisition of Redbox in August 2020 for $370 million [1]. With the takeover, Chicken Soup for the Soul Entertainment assumed $359.9 million of Redbox's debt [1].

It's worth noting that Chicken Soup for the Soul Entertainment had previously dissolved its board of directors on June 11, 2024, with chairman and CEO Bill Rouhana Jr. owning 79% of the voting power represented in its outstanding common stock [1].

Despite the challenges, Chicken Soup for the Soul Entertainment remains optimistic about its future. The company operates three flagship ad-supported streaming services: Redbox, Crackle, and Chicken Soup for the Soul, as well as a free, ad-supported streaming television service (FAST), a transactional VOD service, and a network of approximately 27,000 Redbox rental kiosks across the U.S. [1]. It also produces, acquires, and distributes films and TV series through its Screen Media and Chicken Soup for the Soul TV Group subsidiaries.