Chicken Soup for the Soul Entertainment, the parent company of Redbox, has turned its bankruptcy case into a liquidation, leading to Redbox's closure.
The 22-year-old DVD rental service will shut down, leaving shoppers sad about losing a long-standing favorite that outlived many competitors.
Redbox Closures Nationwide
The Wall Street Journal has reported that the liquidation of Redbox's bankruptcy will lead to the closure of its 24,000 DVD rental kiosks across the country and result in about 1,000 job losses.
As posted on the People, tt remains unclear when these kiosks will close. U.S. Bankruptcy Judge Thomas Horan approved the liquidation after determining that the company could no longer pay its employees or bills.
Judge Horan highlighted the need for a Chapter 7 trustee to investigate the company's operations thoroughly. He noted the dire situation for employees who are facing job losses without compensation for their work.
This decision follows the filing for bankruptcy protection by Chicken Soup for the Soul Entertainment, Redbox's parent company, on June 29, amid nearly $1 billion in debt.
This comes almost two years after the company acquired Redbox in August 2022, aiming to significantly expand its operations.
Also Read:Fazoli'z Abruptly Shuts Down One of Its 200 Locations
Shoppers Mourn Redbox Closures
As the iconic bright red Redbox machines begin to disappear from stores like Walmart and CVS, movie fans are turning to social media to share their feelings.
Many are expressing sadness over the loss, with one shopper noting on Facebook that renting movies on weekends won't be the same without Redbox.
A user on Facebook reflected on Redbox's impact, calling it a game changer and remarking on its impressive run.
Others pointed out that with Redbox's closure, the era of movie rentals is essentially over, with one person describing the situation as heartbreaking despite being somewhat expected.
Redbox's Decline Amid Streaming Rise
When Chicken Soup for the Soul Entertainment acquired Redbox in 2022, William J. Rouhana Jr., the company's chairman and CEO, believed the purchase would significantly expand the company's reach quickly.
Redbox, once a giant in the DVD rental industry with over 43,000 machines and $1.97 billion in peak revenue, has been overshadowed by on-demand streaming services.
The U.S. Sun stated that the company's streaming initiative, launched in 2017, will also shut down following bankruptcy.
This follows a recent expansion of its Redbox Free Live TV service. After acquiring Redbox in 2022 for $375 million to boost rental numbers, Chicken Soup for the Soul Entertainment faced mounting debts, reaching $970 million against assets of $414 million.
Richard Pachulski, the company's lawyer, described the situation as heartbreaking and noted the team's exhaustive efforts to find a solution.
Meanwhile, according to Investorplace, Chicken Soup for the Soul Entertainment faced several challenges, including claims of mismanagement and the impacts of the COVID-19 pandemic.
Lockdowns during the pandemic hurt the company's business, and the use of its DVD kiosks didn't recover as anticipated after the pandemic ended.
Despite these issues, the company's stock, CSSEQ, saw a rise of 6.4% as of Friday afternoon.
Moreover, reports indicate that a town hall meeting for Redbox employees took place on Thursday, addressing concerns over missed paychecks from the previous month.
Walgreens and Walmart are among the creditors awaiting payment from Redbox, along with major media companies such as Warner Bros., Paramount Pictures, and Lionsgate, according to Variety.
Related Article: Denny's Restaurant Bids Farewell to Middletown After 45 Years
