Redbox’s financial situation continues to spiral out of control. On Thursday, a Los Angeles court handed down a $16.7 million judgment against Redbox in favor of NBCUniversal after the company failed to pay a scheduled installment of a settlement agreement reached in early May.
The failure to pay bodes ill for the DVD kiosk company, which now owes the entire balance. What’s more, the failure to pay suggests the company simply doesn’t have the necessary funds on hand, putting Redbox and its debt-ridden parent Chicken Soup for the Soul Entertainment at risk of bankruptcy.
NBCUniversal sued Redbox in February, alleging non-payment of DVD and online rental royalties. The studio said in its complaint that Redbox stopped paying royalties “around the summer of 2022,” and is owed a total of about $16.7 million.
Chicken Soup Company acquired Redbox with $325 million in debt, and its financial situation has been deteriorating since then
After initially objecting to the request, Redbox settled with Universal in May, agreeing to pay the entire $16.7 million in three installments. The initial $4 million payment was supposed to be remitted to Universal Pictures by June 10, but it never arrived. As part of the terms of the settlement, Redbox agreed that if it failed to live up to the agreement, a court could enter judgment against it and require it to deduct the full amount of money paid. After failing to pay, Universal asked the court to enforce the settlement and enter judgment against Redbox and Chicken Soup – a request that Los Angeles Superior Court Judge Holly J. Fujie granted Thursday morning.
Chicken Soup for the Soul Entertainment took on $325 million in debt when it acquired DVD Kiosk Company in August 2022, and its financial situation has been in decline ever since. The company ended the first quarter with a cumulative deficit of $937 million and was increasingly sued by business partners over unpaid bills.
The chicken soup company originally planned to raise $175 million this spring to pay NBCUniversal’s expenses, settle other lawsuits and pay off debt held by its largest creditor, but failed to do so. As a result, the company defaulted on its debt in early June but did not immediately seek bankruptcy protection. Instead, its chief executive, Bill Rouhana, fired the company’s entire board of directors, including his own wife.
All of this comes as Redbox faces another looming crisis: The company that leased more than 400 cars to Redbox also sued over unpaid bills and won the right to repossess the cars in early June. Redbox notified its employees this week that it will begin turning some of those cars over to fleet companies — a step company representatives described as an “evolution.”[ing] Our fleet strategy” in a message to employees by edge.
In an earlier court filing, Redbox’s attorneys were less cavalier about the consequences of losing rental cars, writing: “Redbox will be forced to lay off hundreds of jobs and will be shuttered.”
Chicken Soup for the Soul Entertainment did not respond to a request for comment.
