Redbox DVD Kiosk Owner Chicken Soup for the Soul Files for Bankruptcy

The media company filed for Chapter 11 protection in Delaware late Friday, listing assets and liabilities of at least $500 million each. The deposit allows Chicken Soup to continue operating while it works on a plan to repay creditors.

Chicken Soup has struggled to meet its financial obligations after buying DVD rental company Redbox in 2022, according to court documents. The company took on about $360 million in debt as part of the deal, a sum that would be manageable only if it could capitalize on movie releases rebounding from pandemic-era lows, Chairman William J. Rouhana Jr. said in a sworn statement to the bankruptcy court.

Although the film industry has rebounded somewhat, it needs additional cash to buy and distribute new content, Rouhana said. But the company’s creditors have vetoed a new loan facility, starving the company of funds, Rouhana said.

This left Chicken Soup “unable to pay for all the movies offered by its suppliers, and operating results did not meet management’s expectations, particularly with respect to Redbox kiosk rentals, resulting in insufficient cash flow and working capital to effectively run the business,” Rouhana said.

According to court documents, the company plans to use its bankruptcy to sell some of its business units and restructure others. It took on $20 million in new debt to finance the bankruptcy proceedings.

Chicken Soup still operates about 24,000 Redbox DVD rental kiosks across the United States. It also runs Crackle, a free streaming service that relies on advertising to make money. The company’s content library includes 28,000 movies and 40,000 TV episodes, according to court documents.

The Connecticut-based company was founded in 1993 and is named after its wellness books. Its expansion into film and television programming and video streaming came later, along with a line of premium pet food. It became a publicly traded company in 2017.

A company representative declined to comment beyond court filings.

The case is Chicken Soup for the Soul Entertainment Inc., 24-11442, United States Bankruptcy Court for the District of Delaware.