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The streaming era has claimed another physical media victim. It is finally time to say goodbye to the once ubiquitous Redbox DVD rental kiosks.
Judge Thomas Horan of the US Bankruptcy Court District of Delaware on Wednesday granted Redbox’s parent company’s — Chicken Soup for the Soul Entertainment (CSSE) — request to convert its chapter 11 bankruptcy to a liquidation proceeding under chapter 7.
The company’s lawyer Richard Pachulski said in a hearing on Wednesday that Redbox will layoff its workers and liquidate its business assets which include a streaming service and 24,000 DVD rental kiosks, the Wall Street Journal reported.
Pachulski also said the company’s creditors are no longer willing to risk financing the company.
CCSE first filed for chapter 11 bankruptcy, listing $970 million in debt and $414 million in assets, according to Variety. The creditors included Walmart and Walgreens — where some of the kiosks were located —, as well as media companies like Warner Bros. Home Entertainment, Paramount Pictures, and Lionsgate.
CCSE is a subsidiary of Chicken Soup for the Soul, a publishing company that is not involved in the bankruptcy.
CCSE acquired Redbox for $370 million in August of 2020, however, it also took on $359.9 million of Redbox’s debt. It had hope to bring the struggling Redbox back to its pre-pandemic numbers. At its peak, Redbox operated over 43,000 kiosks across the U.S. and Canada. Its revenue hit a high of $1.97 billion in 2013.
In recent court filings, a top lender, HPS Investment Partners, alleged gross mismanagement at Redbox and claimed it missed payroll for the past month resulting in employees losing medical benefits.
Horan said he will appoint a trustee to investigate the allegations.
“There is no means to continue to pay employees, to pay any bills,” Horan said, according to the Wall Street Journal. “Based on allegations we’ve heard, it’s important that a chapter 7 trustee be appointed and undertake an appropriate investigation of the company.”