The streaming era has claimed another physical media casualty. It is finally time to bid farewell to the once ubiquitous Redbox DVD rental kiosks.
Judge Thomas Horan of the US Bankruptcy Court District of Delaware on Wednesday approved Redbox’s parent company, Chicken Soup for the Soul Entertainment (CSSE), to convert its chapter 11 bankruptcy to a liquidation proceeding under chapter 7.
The company’s lawyer, Richard Pachulski, stated during a hearing on Wednesday that Redbox will lay off its workers and liquidate its business assets, which include a streaming service and 24,000 DVD rental kiosks, according to the Wall Street Journal.
Pachulski also mentioned that the company’s creditors are no longer willing to risk financing the company.
CSSE initially filed for chapter 11 bankruptcy, listing $970 million in debt and $414 million in assets, according to Variety. Creditors included Walmart and Walgreens, 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 that is not involved in the bankruptcy.
CSSE acquired Redbox for $370 million in August 2020 but also took on $359.9 million of Redbox’s debt. It hoped to restore Redbox to its pre-pandemic numbers. At its peak, Redbox operated over 43,000 kiosks across the U.S. and Canada, with revenue reaching as high as $1.97 billion in 2013.
In recent court filings, a top lender, HPS Investment Partners, alleged gross mismanagement at Redbox and claimed it missed payroll for the past month, resulting in employees losing medical benefits.
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 allegations we’ve heard, it’s important that a chapter 7 trustee be appointed and undertake an appropriate investigation of the company.”