Chicken Soup for the Soul, owner of Redbox DVD kiosk, 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 filing allows Chicken Soup to continue operating while it works on a plan to repay creditors.

According to court documents, Chicken Soup struggled to meet its financial obligations after purchasing DVD rental company Redbox in 2022. The company took on approximately $360 million in debt in the deal , a sum that would only be manageable if it could capitalize on film 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 vetoed a new loan facility, starving the company of funds, according to Rouhana.

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

The company plans to use its bankruptcy to sell some business units and restructure others, according to court documents. It raised $20 million in new debt to finance the Chapter 11 process.

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

The Connecticut-based company was founded in 1993 and is named after its heartwarming books. Its expansion into film and television programming and video streaming came later, along with a line of premium pet foods. 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.