The streaming era has claimed another victim among physical media providers. The once ubiquitous Redbox DVD rental kiosks will soon be no more.
Judge Thomas Horan of the US Bankruptcy Court District of Delaware granted the request of Redbox’s parent company, Chicken Soup for the Soul Entertainment (CSSE), to convert its chapter 11 bankruptcy to a chapter 7 liquidation proceeding. This decision marks the end for Redbox and its services, including its 24,000 DVD rental kiosks and a streaming service.
During a Wednesday hearing, CSSE’s lawyer Richard Pachulski revealed that Redbox will layoff its employees and liquidate its business assets. Pachulski indicated that the company’s creditors are no longer willing to provide financial support.
CSSE first filed for chapter 11 bankruptcy, reporting $970 million in debt and $414 million in assets. Among its creditors were Walmart and Walgreens, where many kiosks were located, as well as media companies like Warner Bros. Home Entertainment, Paramount Pictures, and Lionsgate. CSSE is a subsidiary of Chicken Soup for the Soul, a publishing company not involved in the bankruptcy proceedings.
CSSE acquired Redbox for $370 million in August 2020 and assumed $359.9 million of Redbox’s debt. The company had hoped to revive Redbox’s fortunes to pre-pandemic levels. At its height, Redbox operated over 43,000 kiosks in the U.S. and Canada, achieving its revenue peak of $1.97 billion in 2013.
Recent court filings by HPS Investment Partners, a top lender to Redbox, accused the company of gross mismanagement and stated it missed payroll for the past month, resulting in employees losing their medical benefits.
Judge Horan stated he would appoint a trustee to investigate these allegations. “There is no means to continue to pay employees, to pay any bills,” Horan said, according to the Wall Street Journal. “Based on the allegations we’ve heard, it’s important that a chapter 7 trustee be appointed and undertake an appropriate investigation of the company.”