informed employees of the filing late Friday […] that it had filed for a debtor-in-possession loan — a way for companies that are reorganizing after filing for bankruptcy to secure additional working capital to meet payroll. […] employees have been waiting for paychecks since June 21st […] it’s not certain that the company will be able to secure such a loan.
Chicken Soup took on $325 million in debt when it acquired Redbox in 2022 and has since been sued over a dozen times over unpaid bills.
Sad to see this for two reasons:
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Physical discs and the rental model have always been a fallback against oppressive streaming licensing, and with so few video rental stores left it Redbox was the last one standing.
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It sounds like they missed payroll for their workers. No worker deserves to have their finances thrown into chaos because an employer can’t manage their books.
I don’t doubt that rental companies have been squeezed harder and harder on licensing costs specifically to drive them out so the publisher-owned services take over
I’m not sure that was much of an issue for DVD. Historically VHS had those huge licensing terms for new releases ($90 for VHS), but the same rules didn’t apply to DVD (new releases $20). This was one of the main reasons VHS rentals died so fast after DVDs came out.
Also at least at one time, I remember Redbox was simply buying DVDs at retail stores instead of buying from retail stores for their disc inventory. I see that Walmart is listed as a creditor. That makes me think perhaps Redbox still was.
I’d wager walmart is listed because they weren’t paying their floor rent for all the redboxes they have at walmarts, not that they were buying DVDs there.
Thats a very good point.
One of the few good legal standards around bankruptcy is that unpaid wages to workers are actually, surprisingly paid out of assets prior to investors getting their cut.
I’ll agree that’s a good thing, but that depends on there being assets (likely in this case), but it also means workers may have to wait months or years before the bankruptcy proceedings are complete. That shouldn’t be a burden lower wage workers have to shoulder.
No and in a classic capitalist paradise, in the US state DOLs/BOLIs have emergency funds out of which they pay workers wages. For the capitalists who couldn’t. Privatize the gains, socialize the losses. Learned about that when a regional Thai restaurant chain went under, declared bankruptcy and then the state paid their workers. So messed up. Such a great reason to get corporate shielding so your “personal” gains aren’t subject to clawback.
Corporate law has to change, but unlikely as things are.
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The biggest revelation to me is that Chicken Soup for the Soul owns Redbox and Crackle. Just odd.
Yet another example of leveraged buyouts being bad and dumb. The “risk” may be technically on the company you’re buying’s books but it’s really on the employees who actually face the real consequences of the bet failing.
wait they paid 325 millions in 2022 for Redbox???
Why???
How they thought they could have a return on that investment??!
They have 38,000 kiosks. So that’s ~$10k/kiosk.
Honestly, that may be a fair price, assuming these machines are profitable. Vending machines make $4-10k revenue/year. Assuming that holds for RedBox, that should make >$2k profit per year, which would make aquisition reasonable. The question is, is that what they’re getting?
If I were in their shoes, I’d expand the options at the kiosks to include console games, and maybe a limited selection of snacks (e.g. popcorn), if it can be retrofitted.
The last many times I have gone to rent from Redbox their machine was an out of order. Non functional rental machines sure does not help matters.
Imagine that: some scammy motivational speakers who have been peddling a bunch of feel-good bullshit for decades didn’t know how to fix a company that was hemorrhaging money with warm thoughts and regards.
I would have taken that bet.
this is bad because a lot of rural and lower income places depend on redbox for entertainment
But it’s good news for the Crash 'em Up Derbies!
If only Redbox had 4k blurays I’d probably have used them more, but I know that’s probably way too niche.
