informed employees of the filing late Friday […] that it had filed for a debtor-in-possession loan — a way for companies that are reorganizing after filing for bankruptcy to secure additional working capital to meet payroll. […] employees have been waiting for paychecks since June 21st […] it’s not certain that the company will be able to secure such a loan.
Chicken Soup took on $325 million in debt when it acquired Redbox in 2022 and has since been sued over a dozen times over unpaid bills.
Sad to see this for two reasons:
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Physical discs and the rental model have always been a fallback against oppressive streaming licensing, and with so few video rental stores left it Redbox was the last one standing.
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It sounds like they missed payroll for their workers. No worker deserves to have their finances thrown into chaos because an employer can’t manage their books.
I don’t doubt that rental companies have been squeezed harder and harder on licensing costs specifically to drive them out so the publisher-owned services take over
I’m not sure that was much of an issue for DVD. Historically VHS had those huge licensing terms for new releases ($90 for VHS), but the same rules didn’t apply to DVD (new releases $20). This was one of the main reasons VHS rentals died so fast after DVDs came out.
Also at least at one time, I remember Redbox was simply buying DVDs at retail stores instead of buying from retail stores for their disc inventory. I see that Walmart is listed as a creditor. That makes me think perhaps Redbox still was.
I’d wager walmart is listed because they weren’t paying their floor rent for all the redboxes they have at walmarts, not that they were buying DVDs there.
You can buy discs online.
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The biggest revelation to me is that Chicken Soup for the Soul owns Redbox and Crackle. Just odd.
Yet another example of leveraged buyouts being bad and dumb. The “risk” may be technically on the company you’re buying’s books but it’s really on the employees who actually face the real consequences of the bet failing.
Imagine that: some scammy motivational speakers who have been peddling a bunch of feel-good bullshit for decades didn’t know how to fix a company that was hemorrhaging money with warm thoughts and regards.
I would have taken that bet.
