The streaming era has claimed another victim in the realm of physical media. Redbox DVD rental kiosks, once a common sight, are about to become a thing of the past.
Judge Thomas Horan of the US Bankruptcy Court District of Delaware has approved the request by Redbox’s parent company, Chicken Soup for the Soul Entertainment (CSSE), to convert its chapter 11 bankruptcy to a liquidation proceeding under chapter 7.
During a hearing, CSSE’s lawyer Richard Pachulski announced that Redbox would lay off its employees and sell off its business assets, which include a streaming service and 24,000 DVD rental kiosks, according to the Wall Street Journal.
The decision follows the company’s creditors opting not to continue financing Redbox. CSSE had initially filed for chapter 11 bankruptcy with $970 million in debt and $414 million in assets. The creditors included major companies like Walmart, Walgreens, Warner Bros. Home Entertainment, Paramount Pictures, and Lionsgate.
Redbox, which CSSE acquired for $370 million in 2020, was laden with $359.9 million of debt at the time of purchase. CSSE had hoped to revive the struggling business to its former glory. At its peak, Redbox operated over 43,000 kiosks in the U.S. and Canada, generating revenue up to $1.97 billion in 2013.
Recent court filings reveal that HPS Investment Partners, a top lender, accused Redbox of gross mismanagement and reported that the company missed payroll for the past month, which caused employees to lose medical benefits.
Judge Horan stated he would appoint a trustee to investigate these claims. “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.”