Redbox Parent Company Declares Bankruptcy

It’s hard to imagine a time before streaming services, before almost any television show or movie became accessible at the click of a button. Some may have fond childhood memories of going to Blockbuster or Planet Video to rent a few VHS tapes for the weekend. VHS tapes gave way to DVDs, and their smaller size allowed for rental through kiosks rather than an entire store. You’ve probably seen a Redbox, which looks just like it sounds, outside your local grocery store or pharmacy. Redbox allowed customers to choose DVDs to rent for a few days before returning in the same machine’s slot, all without the rent and labor costs associated with a video rental store. Redbox’s main competitor in this field was Netflix, which at the time sent customers their movie rental choices through the mail. Netflix has since pivoted to being known as a streaming service, and has been joined by other services like Hulu, Amazon Prime, HBO Go, Disney Plus, Philo, and Sling. While Redbox stayed on the market as an option for customers who only want to pay for the specific films they want to watch, streaming services have clearly won the battle for customers, at least for now. Redbox’s parent company, Chicken Soup for the Soul Entertainment, filed for bankruptcy July 1, 2024. 

Redbox was launched in 2002 and at its peak, had 34,000 locations across the United States. Chicken Soup for the Soul Entertainment, or CSSE, acquired Redbox from Apollo Global Management in 2022 and agreed to take on approximately $325 million in debt. This was part of a larger strategy to combine the DVD rental service with its free streaming service, Crackle. Redbox was already struggling due to a lack of customers seeking to rent physical copies of movies, and was hindered even further by strikes in Hollywood. Netflix ceased its physical rental services due to the strikes. 

CSSE filed for bankruptcy with $1 billion in debt. Redbox’s employees reportedly haven’t been paid in a week, and their medical benefits have been suspended. Chapter 11 bankruptcy can help a company that is dealing with these types of issues, but the Delaware courts must approve the filing first. CSSE also has a publishing branch- you may remember the brand’s popular self-help books- but this won’t be affected by the bankruptcy filing. 

As CSSE’s filing demonstrates, a bankruptcy debtor enjoys significant protections after filing without losing protected assets. It can give a debtor time to address financial issues before creditors have a chance to act. Individuals can benefit from filing for bankruptcy just as much as businesses can. To learn more about the process of filing for bankruptcy in Las Vegas, Nevada, contact our firm for your free consultation at 702-370-0155. 

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Chapter 11 Bankruptcy

CSSE filed for chapter 11 bankruptcy, which is unique from chapter 7 and chapter 13, the two most common types of personal bankruptcy. Unless a business qualifies for small business provisions, chapter 11 bankruptcy requires the appointment of a creditor committee. The members of this committee are representatives from the debtor’s primary creditors. The committee can prevent a business bankruptcy debtor from taking major initiatives that could affect the bankruptcy case, like opening and closing stores, selling large amounts of shares, selling inventory and equipment, etc. However, decisions related to the normal daily operations of the business will stay with the company’s typical managers. 

A debtor who files for chapter 13 bankruptcy knows that their case will last either 3 or 5 years, and a debtor who files for chapter 7 bankruptcy can expect their case to last approximately 3 to 6 months. There is no set time frame for a chapter 11 bankruptcy case. It takes as long as it takes for the debtor and creditor committee to reach an agreement on how the company should emerge from bankruptcy. There are several ways a company can do this. Sometimes a struggling company can find a lender willing to provide funding to bring the company the stability it needs to turn a profit, or finding an investor willing to take over the business as a whole. Other companies might shut down with a chapter 11 in place to safeguard the process.  

Chapter 11 bankruptcy is an option for individuals struggling with debt, but it is usually one of the more expensive and unnecessarily complicated options. Chapter 7 and chapter 13 usually offer the benefits a debtor is seeking without the legal complexity and associated legal fees of chapter 11. To see which might be the best for your possible bankruptcy filing in Las Vegas, Nevada, contact our firm for your free consultation at 702-370-0155. 

Filing For Bankruptcy Under Pressing Circumstances

Redbox’s bankruptcy filing came in the wake of missing paychecks and suspended health benefits for employees. There is no faster way for a company to damage its reputation by failing to provide for its employees in such an obvious way. Chapter 11 bankruptcy will allow Redbox to sort out this issue while protecting its assets from seizure by other creditors. This may be necessary to ensure that CSSE can survive this debacle, whether or not Redbox makes it out of the other side of bankruptcy. This is just one of countless examples of what could constitute an “emergency” situation for a corporate bankruptcy, although CSSE was likely planning the filing for months in advance. 

Someone filing a personal bankruptcy may have an emergency situation requiring a fast filing just like a major corporation. Like a corporation, an individual’s creditors may be threatening to file a lawsuit or enforce a judgment. Secured creditors can repossess assets without protections from the automatic stay in place. But many creditors have a favorite form of collection action against an individual debtor: wage garnishment. Once a creditor has obtained a judgment against the debtor, they can garnish the debtor’s wages, or automatically receive a substantial portion of their paychecks until the balance (plus fees and interest) has been paid in full. If a debtor doesn’t have enough time to complete their bankruptcy petition before the deadline for any of these types of actions, they should consider an emergency petition filing. 

An emergency petition is a shorter version of a bankruptcy petition, meaning it requires far less information to produce. This can be handy for a debtor who needs to fight off an impending creditor action. To create an emergency bankruptcy petition, the debtor will need the following:

  • A government-issued form of photo identification
  • A Social Security card or original W-2 that contains the debtor’s Social Security number
  • The course completion certificate from the first online credit counseling course
  • Six months’ worth of paystubs or other applicable income information

Learn About Your Bankruptcy Options With Our Las Vegas Bankruptcy Team

Filing for bankruptcy may sound complicated, but it doesn’t have to be when you have a skilled bankruptcy lawyer in your corner. At Vegas Bankruptcy Lawyers, our Zero Down Bankruptcy team knows just what it takes to take your case from filing to discharge as quickly and easily as possible. Weigh your options and see if you qualify for our Zero Down payment option with your free consultation. To schedule your free consultation with our firm today, contact us or call 702-370-0155.

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