Following filing for Chapter 7 bankruptcy, Redbox is in the process of liquidating its assets, including the 24,000 red DVD rental kiosks found at locations such as Walmart and McDonald’s.
The company has struggled for years and, in 2022, with a debt of $325 million, was acquired by Chicken Soup for the Soul Entertainment, per NBC News. Since then, its debt has surged to $1 billion.
In addition to shutting down kiosks, more than 1,000 employees will lose their jobs.
During a town hall meeting, employees learned they would not receive back pay due to the company’s financial struggles, according to NBC News.
“1,000 people are about to lose their jobs,” said Judge Thomas Horan, per The Hollywood Reporter, “and they’re not even going to be paid for work that they did.”
A trustee overseeing the liquidation will investigate whether funds deducted from employee paychecks for health care benefits were used for other purposes, a claim denied by William Rouhana, former CEO of Chicken Soup for the Soul Entertainment.
“I find it sickening, frankly,” Horan said of the allegations.
Why is Redbox closing?
Founded in 2002, Redbox revolutionized the movie rental industry, peaking in 2013 with $1.97 billion in revenue and 43,000 kiosks, according to Variety. However, the rise of streaming services severely impacted Redbox’s business.
Chicken Soup for the Soul Entertainment reported a loss of approximately $636 million in 2023 and $53 million in the first quarter of 2024, per The Hollywood Reporter.
Attempts to file for Chapter 11 bankruptcy, which would allow the company to restructure, were challenged by HPS Investment Partners, one of its top lenders, who argued that mismanagement necessitated liquidation to recover creditor losses.
A court filing by HPS argued there was “credible basis” that Rouhana could be held liable for misusing funds.
The Chapter 11 bankruptcy was converted into a Chapter 7, which resulted in the company’s liquidation.
“Love you guys,” Redbox’s last post to X says.
T-Mobile responded to the post by saying, “I’ll miss you, old friend.”
What will happen to Redbox kiosks?
With the company’s liquidation, all assets, including the kiosks, will be sold. The kiosks are still operational and can be used for purchases, according to Fast Company. However, this is expected to change as the liquidation plan is finalized.
There is no news yet on when kiosks will start being taken down. DVDs rented from the service can still incur late fees if not returned, despite Redbox’s bankruptcy.
Redbox’s website no longer lists movies, and its kiosk location search indicates no available locations. Additionally, per Fast Company, its films-on-demand function is not operational.