Chicken Soup for the Soul Entertainment, the entertainment company that operates Redbox, Crackle and other businesses, filed for Chapter 11 bankruptcy protection — after failing to pay employees and vendors for at least the past four weeks.
The company’s June 28 bankruptcy petition was filed in the U.S. Bankruptcy Court for the District of Delaware. In the filing, Chicken Soup for the Soul Entertainment listed total debts of $970 million and consolidated assets of $414 million as of March 31, 2024.
As of March 31, Chicken Soup for the Soul Entertainment reported cash and equivalents of $4.9 million, which included $4.6 million of restricted cash.
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Creditors listed on CSSE’s bankruptcy include Universal Studios Home Entertainment (which is owed $16.7 million) as well as Universal City Studios Productions ($16.7 million), Sony Pictures Home Entertainment ($9.1 million), BBC Studios Americas ($9 million), Walgreens ($5 million), Lionsgate ($4.6 million), Walmart ($4.1 million), Vizio ($2.75 million), Warner Bros. Home Entertainment ($2 million), and Paramount Pictures ($1.96 million) and Paramount Home Entertainment ($1.2 million).
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As of the date of the bankruptcy filing, Chicken Soup for the Soul said it had about 836 full-time employees and 197 part-time employees (1,033 total). In a court filing, the company estimated that it owes employees approximately $3.52 million in unpaid wages and also is obligated to pay $2.24 million in health and welfare benefits and $594,204 toward workers’ 401(k) plans. Chicken Soup for the Soul Entertainment disclosed that it was “unable to make payroll for the two-week period ending on June 14, 2024.”
The company had previously reported in an SEC filing that on June 11, 2024, chairman and CEO Bill Rouhana Jr. (owner of 79% of the voting power represented in its outstanding common stock) had dissolved its board of directors. Rouhana stepped down as CEO on June 24, according to bankruptcy court documents.
In a declaration filed in support of the bankruptcy petition, Rouhana said CSSE “experienced liquidity challenges,” which the company has asserted “were proximately caused by repeated commercially unreasonable failures” and because of “refusals” by its lenders “to live up to their obligations, resulting in asserted defaults and/or contractual terminations across critical content and service providers, thereby impacting the Debtors’ ability to procure and monetize content efficiently across their valuable distribution platforms.”
Chicken Soup for the Soul Entertainment owns and operates three flagship ad-supported streaming services: Redbox, Crackle and Chicken Soup for the Soul. In addition, the company operates Redbox Free Live TV, a free, ad-supported streaming television service (FAST), a transactional VOD service, and the network of about 27,000 Redbox rental kiosks across the U.S. The company produces, acquires and distributes films and TV series through its Screen Media and Chicken Soup for the Soul TV Group subsidiaries.
The company acquired a majority stake in Crackle from Sony Pictures Television in 2019. CSSE announced the close of its acquisition of Redbox in August 2020, in a deal valued at $370 million; with the takeover of Redbox, Chicken Soup for the Soul Entertainment assumed $359.9 million of debt.
In his declaration, Rouhana said CSSE’s ability to service the Redbox debt was “predicated on a partial return to pre-COVID levels in the number and cadence of theatrical releases that were available to the company for its kiosk network, as well as cost synergies. The corresponding rebound in demand for physical kiosk rentals was expected to return to approximately one-third of 2019 levels.”
Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul LLC, which publishes the famous book series and produces pet food under the Chicken Soup for the Soul brand name.