BENTONVILLE (dpa-AFX) - Chicken Soup for the Soul Entertainment (CSSE), the parent company of the movie rental company Redbox, filed for Chapter 11 protection in Delaware due to a debt of about $970 million.
The company owes millions to other media companies such as Universal Studios, Sony Pictures (SONY), and BBC Studios Americas, as well as several retailers, including Walgreens (WBA) and Walmart (WMT).
According to the filing, the media company took a loan of over $300 million following the acquisition of Redbox in 2022 from Apollo Global Management (APO).
Later, the company struggled to combine the DVD rental business with its free streaming services Crackle, due to Hollywood strikes, which limited the production of new content, and people's low interest in renting physical DVDs, as per CNN.
The Connecticut-based company started looking for additional funds, but the company's lenders vetoed the new loan facility, which left Chicken Soup 'unable to pay for all the movies that were offered by their providers, and operating results failed to meet management's expectations, particularly in Redbox's kiosk rentals, resulting in insufficient cash flows and working capital to operate the business efficiently', according to Fortune.
Notably, the company's publishing unit is not affected by the bankruptcy filing.
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