Chicken Soup for the Soul, owner of Redbox DVD kiosks, files for bankruptcy

Chicken Soup for the Soul Entertainment Inc. – a seller of self-help books, film and television content – ​​filed for bankruptcy after failing to recover from a heavy debt load.

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

Chicken Soup struggled to meet its financial obligations after buying DVD rental company Redbox in 2022, court papers show. It took on about $360 million in debt in connection with the deal, an amount that could only be managed if it could bounce back from pandemic-era lows and take advantage of movie releases, Chairman William J. Rouhana Jr. said in a bankruptcy court affidavit.

Rouhana said that although the film business improved somewhat, it needed additional cash to buy and distribute new content. But according to Rouhana the company's lenders vetoed the new loan facility, leaving the business short of funds.

Rouhana said this caused Chicken Soup to be “unable to pay for all of the movies offered by its providers, and operating results failed to meet management's expectations, particularly Redbox's kiosk rentals, resulting in insufficient cash flow and working capital to operate the business efficiently.”

According to court documents, the company plans to use its bankruptcy to sell some business units and restructure others. It has lined up a new $20 million loan to fund the Chapter 11 process.

Chicken Soup still operates about 24,000 Redbox DVD rental kiosks across the U.S. It also runs Crackle, a free streaming service that relies on ads to make money. According to court documents, the company's content library includes 28,000 films and 40,000 television episodes.

The Connecticut-based company was founded in 1993 and was named for its feel-good books. It later expanded into film and television programming and video streaming, as well as launching a line of premium pet food. In 2017 it became a publicly traded company.

A representative for the company declined to comment beyond the court documents.

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

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