Chicken Soup For The Soul Kills Redbox
Redbox is not long for this world. The DVD rental service’s parent company—Chicken Soup for the Soul Entertainment—has shifted its bankruptcy filing from Chapter 11 to Chapter 7 and is liquidating its businesses and assets.
If you’ve been to a grocery store or Walmart in the last decade or so you’ve likely seen a Redbox kiosk. The bright red boxes contained movies (and for a time video games) that people could rent, enjoy at home, and then drop off back at the kiosk. The company launched in 2002 and quickly became popular as an alternative to rental shops. However, as streaming became bigger and bigger, Redbox found itself less and less relevant. In May 2022, Chicken Soup For The Soul Entertainment purchased Redbox for $375 million. And now, the company is going bankrupt and killing Redbox in the process.
As reported by Deadline on July 10, Chicken Soup For The Soul motioned in court to change its bankruptcy from Chapter 11 to Chapter 7. The company had originally filed for bankruptcy in June. It planned to keep some employees and try to survive the storm, but when an investor backed out and would no longer cover employee compensation and health care costs, Chicken Soup For The Soul—facing nearly a billion dollars in debt—was forced to liquidate its assets.
Deadline reports that Richard Pachulski, a lawyer for Chicken Soup, told the court that the situation was “heartbreaking” and that its lawyers had worked “day and night” to find a better solution. However, that wasn’t possible and now the company is laying off all Redbox employees and shutting down all 24,000 DVD rental kiosks.
In an email to Chicken Soup staff, obtained by Deadline, former board members Rob Warshauer and John Young explained that a Chapter 7 bankruptcy trustee would be appointed and they would possibly “terminate all employees.” Apparently, employees had been denied health care coverage and paychecks had been delayed.
“It’s not right what they’re doing to the employees,” one worker reportedly told Deadline. “We’re all getting screwed over.”
You might be wondering how Chicken Soup For The Soul Entertainment, which was spun off the popular self-help books, is facing a billion dollars in debt. It’s a tale we’ve heard many times before. A company desperate to make numbers go up and focused entirely on growth, recklessly purchases companies (like Crackle) for millions of dollars in a short amount of time, and then, inevitably, they can’t make enough to keep the lights on and a bunch of employees are punished and lose their jobs because greedy assholes at the top wanted more.
It’s fun that this just keeps happening over and over. Wait, fun isn’t the word I meant to use. Horrible. That’s it! That’s the word.
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