The streaming age has claimed another casualty in the realm of physical media: the once-popular Redbox DVD rental kiosks.
Judge Thomas Horan of the U.S. Bankruptcy Court District of Delaware on Wednesday approved a request from Redbox’s parent company, Chicken Soup for the Soul Entertainment (CSSE), to convert its chapter 11 bankruptcy to a liquidation proceeding under chapter 7.
According to the Wall Street Journal, Richard Pachulski, the company’s lawyer, stated in a hearing on Wednesday that Redbox will lay off its employees and liquidate its assets, which include a streaming service and 24,000 DVD rental kiosks. He further mentioned that the company’s creditors are no longer willing to provide financing.
Initially, CSSE filed for chapter 11 bankruptcy with $970 million in debt versus $414 million in assets, as reported by Variety. Among the creditors were Walmart and Walgreens, where some kiosks were located, as well as major media companies like Warner Bros. Home Entertainment, Paramount Pictures, and Lionsgate.
CSSE, a subsidiary of the publishing company Chicken Soup for the Soul, which is not part of the bankruptcy, acquired Redbox for $370 million in August 2020 and assumed $359.9 million of its debt. The acquisition aimed to revive Redbox to its pre-pandemic performance levels. At its height, Redbox operated more than 43,000 kiosks across the U.S. and Canada, generating $1.97 billion in revenue in 2013.
Recent court filings by top lender HPS Investment Partners accused Redbox of severe mismanagement, including missing payroll for the past month and causing employees to lose medical benefits.
Judge Horan indicated 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 allegations we’ve heard, it’s important that a chapter 7 trustee be appointed and undertake an appropriate investigation of the company.”