Chicken Soup For The Soul Files For Chapter 11 Bankruptcy
(Bloomberg) -- Chicken Soup for the Soul Entertainment Inc. — the seller of self-help books, film and television content — filed for bankruptcy after failing to outrun a heavy debt load.
The media company filed for Chapter 11 protection in Delaware late Friday, listing assets and liabilities of at least $500 million each. The filing allows Chicken Soup to keep operating while it works on a plan to repay creditors.
Chicken Soup struggled to keep up with its financial obligations after buying DVD rental company Redbox in 2022, court papers show. It took on about $360 million of debt in connection with the deal, a sum that would only be manageable if it could capitalize on movie releases bouncing back from pandemic-era lows, Chairman William J. Rouhana Jr. said in a sworn bankruptcy court statement.
Although the movie business rebounded somewhat, it needed additional cash to buy and distribute new content, Rouhana said. But the company's lenders vetoed a new loan facility, starving the business of funds, according to Rouhana.
That left Chicken Soup “unable to pay for all the movies that were offered by their providers, and operating results failed to meet management's expectations, particularly in Redbox's kiosk rentals, resulting in insufficient cash flows and working capital to operate the business efficiently,” Rouhana said.
The company plans to use its bankruptcy to sell off some business units and restructure others, according to court papers. It lined up $20 million of new debt to fund the Chapter 11 process.
Chicken Soup still operates about 24,000 Redbox DVD rental kiosks across the US. It also runs Crackle, a no-cost streaming service that relies on advertisements to make money. The company's content library spans 28,000 films and 40,000 episodes of television, according court papers.
The Connecticut-based company was founded in 1993 and named for its feel-good books. Its expansion into film and television programming and video streaming came later, along with a line of premium pet food. It became a publicly traded company in 2017.
A representative for the company declined to comment beyond the court filings.
The case is Chicken Soup for the Soul Entertainment Inc., 24-11442, US Bankruptcy Court for the District of Delaware.
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