Chicken Soup for the Soul Entertainment Inc., the vendor of self-help books, film and tv content, filed for bankruptcy after failing to repay a heavy debt load.
The media company filed for Chapter 11 bankruptcy protection in Delaware late Friday, listing assets and liabilities of a minimum of $500 million each. The filing allows Chicken Soup to proceed operating while it really works on a plan to repay creditors.
Chicken Soup struggled to satisfy its financial obligations after buying DVD rental company Redbox in 2022, court records show. In reference to the deal, the corporate took on about $360 million in debt, a sum it could only manage if it could capitalize on movie releases rebounding from pandemic-era lows, Chairman William J. Rouhana Jr. said in a sworn statement in bankruptcy court.
Although the film business recovered somewhat, the corporate needed additional money to purchase and distribute latest content, Rouhana said. But the corporate’s lenders refused a brand new line of credit, leaving the corporate drained of funds, Rouhana said.
This resulted in Chicken Soup “not being able to pay for all the films offered by the vendors and operating results fell short of management’s expectations, particularly in Redbox’s kiosk rental business. This resulted in insufficient cash flows and working capital to operate the business efficiently,” Rouhana said.
The company plans to make use of bankruptcy to sell some businesses and restructure others, court documents show. To finance the U.S. Chapter 11 proceedings, it has taken on $20 million in latest debt.
Chicken Soup still operates about 24,000 Redbox DVD rental stores within the U.S. It also operates Crackle, a free streaming service that monetizes through promoting. The company’s content library includes 28,000 movies and 40,000 television episodes, in response to court documents.
The Connecticut-based company was founded in 1993 and named after its feel-good books. It later expanded into film and tv programming and video streaming, together with a line of high-quality pet food. The company became publicly traded in 2017.
An organization representative declined to comment beyond court filings.
The case is Chicken Soup for the Soul Entertainment Inc., 24-11442, U.S. Bankruptcy Court for the District of Delaware.
