The era of streaming has led to the end of another physical media mainstay, with Redbox DVD rental kiosks being the latest casualty.
Judge Thomas Horan of the US Bankruptcy Court District of Delaware has granted a request from Redbox’s parent company, Chicken Soup for the Soul Entertainment (CSSE), to convert its chapter 11 bankruptcy into a chapter 7 liquidation proceeding.
The company’s attorney, Richard Pachulski, stated that Redbox will lay off its employees and liquidate its business assets, which include a streaming service and 24,000 DVD rental kiosks, according to the Wall Street Journal. He also mentioned that the company’s creditors are no longer willing to finance the company.
CSSE initially filed for chapter 11 bankruptcy, with debt amounting to $970 million and assets worth $414 million, as reported by Variety. The company’s creditors include major retailers like Walmart and Walgreens, where some kiosks were located, as well as media companies such as Warner Bros. Home Entertainment, Paramount Pictures, and Lionsgate.
It should be noted that CSSE is a subsidiary of Chicken Soup for the Soul, a publishing company not involved in the bankruptcy.
CSSE acquired Redbox for $370 million in August 2020, also taking on $359.9 million of Redbox’s debt, with hopes of reviving the struggling company to its pre-pandemic success. At its peak, Redbox operated over 43,000 kiosks across the U.S. and Canada, with revenue reaching $1.97 billion in 2013.
Recent court filings from top lender HPS Investment Partners alleged severe mismanagement at Redbox, including missed payrolls over the past month, leading to employees losing their medical benefits.
Judge Horan stated that a trustee would be appointed to investigate these allegations, emphasizing the need for a thorough examination of the company’s affairs due to its inability to pay employees or bills.