WFCN –
After closing, a large retailer files for unexpected bankruptcy in favor of a fresh Chapter 7 liquidation case.
On July 10, a court order was obtained by Redbox, a DVD rental company, and nineteen other similar companies to transfer their Chapter 11 bankruptcy to a Chapter 7 liquidation.
According to its most recent liquidation filing, Redbox will now start shutting its DVD kiosks worldwide.
An order to convert Redbox parent company Chicken Soup for the Soul Entertainment case was signed by Judge Thomas M. Horan of the U.S. Bankruptcy Court for the District of Delaware.
In order to enable the debtor’s liquidation and winddown, the debtor in this scenario must turn over all documents and assets of the business estate to a Chapter 7 trustee.
The debtor initially filed for Chapter 11 bankruptcy on June 29 and included $500 million to $1 billion in assets and liabilities in its original petition.
In the United States, Redbox has around 24,000 DVD rental kiosks, according to a declaration it filed in its Chapter 11 case.
When Chicken Soup for the Soul Entertainment first bought Redbox in 2022, it took on around $359.9 million in debt under a pre-petition secured facility, which put it in a precarious financial situation.
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The company’s situation deteriorated as they announced net losses of $636.6 million in 2023 and $111.2 million in 2022.
According to The Street, the debtor stated in a June 2024 Securities and Exchange Commission statement that it might have to file for bankruptcy if it couldn’t find more capital.
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