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[Discussion] Redbox Faces Uncertainty as Parent Company Chicken Soup for the Soul Entertainment Files for Bankruptcy

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The DVD rental company Redbox is facing a barrage of financial difficulties after its owner, Chicken Soup for the Soul Entertainment, filed for bankruptcy protection. Announced in a company-wide email, the declaration marked the latest devolution in a series of crises that have plagued Redbox over the past month including missed payroll and reposed fleet.

Life Support: Filing for Debtor-in-Possession Loan

In an email seen by industry insiders, it was disclosed that Chicken Soup for the Soul Entertainment is seeking a debtor-in-possession loan. This is a typical step for companies that have filed for bankruptcy, setting a path for reorganization while securing internal operational funds. Given the company's recent financial missteps - culminating in missed employee paychecks since June 21st - the infusion of cash is pivotal.

Alongside salary concerns, the company informed employees it is working on reinstating the lapsed health insurance, enriching the confidence of the workforce amidst a tough time.

Pay Back Time: Chicken Soup’s Onerous Debts

However, securing the debtor-in-possession loan might not be a walk in the park. According to the bankruptcy filing, Chicken Soup owes considerable debts to a plethora of creditors. Major retailers such as Walmart and Walgreens, plus significant Hollywood studios like Universal, Sony, Lionsgate, and Warner Bros, are all allegedly waiting for outstanding payments.

Additionally, smaller studios, streaming platforms, smart TV manufacturers, landlords, and even car-rental vendors are among the long list allied against Chicken Soup. This list features renowned names such as the BBC, Vizio, and Plex, plus Redbox and Crackle.

A Debt Too Far: Chicken Soup’s Financial Mismanagement

The financial abyss Chicken Soup finds itself in was considerably deepened by the massive debt it undertook when acquiring Redbox in 2022. The $325 million debt proved to be burdensome, leading to a slew of lawsuits hinged on unpaid bills. Despite reaching a settlement agreement with NBCUniversal, Chicken Soup faltered on the first agreed-upon payment. Inviting a court order to pay, the company now faces the daunting task of settling $16.7 million.

In summary, the predicament Chicken Soup finds itself in is immense and widely spread, involving a laundry list of creditors. With debt totaling $970 million according to the bankruptcy filing, the company’s race to secure the debtor-in-possession loan and stabilize operations is pivotal to its survival in the lurching seas of financial uncertainties.

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