Redbox missed a multimillion dollar payment it couldn’t afford to miss

Redbox’s monetary state of affairs continues to spiral out of its management. On Thursday, a Los Angeles court docket entered a $16.7 million judgment in opposition to the corporate in favor of NBCUniversal, after Redbox failed to pay a scheduled installment of a settlement the events reached earlier in May.

The missed payment bodes unwell for the DVD kiosk firm, which now owes the remaining stability in full. More importantly, the missed payment suggests the corporate merely didn’t have the requisite cash available, and the prospect of chapter could also be looming for Redbox and its deeply indebted company mum or dad, Chicken Soup for the Soul Entertainment. 

NBCUniversal sued Redbox over unpaid DVD and on-line rental royalties in February. The studio alleged in its grievance that Redbox had stopped paying royalties “around the summer of 2022” and that it was owed round $16.7 million altogether.

After initially opposing the demand, Redbox settled the lawsuit with Universal in May, agreeing to pay the whole $16.7 million over three installments. An preliminary $4 million payment was supposed to be wired to Universal by June tenth however by no means arrived. As a part of the phrases of the settlement, Redbox agreed that if it ought to fail to make good, a court docket may enter a judgment in opposition to it for the total quantity minus any funds made. After the missed payment, Universal requested the court docket to implement the settlement and enter a judgment in opposition to Redbox and Chicken Soup — a request that was granted Thursday morning by Los Angeles Superior Court Judge Holly J. Fujie.

Chicken Soup for the Soul Entertainment took on $325 million in debt when it acquired the DVD kiosk firm in August of 2022, and its monetary state of affairs has solely gone downhill from there. The firm ended Q1 with an collected deficit of $937 million and is being sued by a rising variety of enterprise companions over unpaid payments.

Chicken Soup had deliberate to elevate $175 million this spring to pay NBCUniversal, settle different lawsuits, and repair debt held by its largest creditor however was unable to achieve this. As a consequence, the corporate defaulted on its debt in early June however didn’t instantly search chapter safety. Instead, its CEO, Bill Rouhana, proceeded to hearth the corporate’s whole board of administrators, together with his personal spouse.

All of that is taking place as Redbox is going through one other imminent disaster: the corporate that’s leasing greater than 400 vehicles to Redbox sued over unpaid payments as properly and gained the best to repossess these vehicles in early June. Redbox knowledgeable its employees this week that it would start to flip over a subset of those vehicles to the fleet firm — a step that firm representatives have painted as “evolv[ing] our fleet strategy” in messages to employees reviewed by The Verge.

In an earlier court docket submitting, Redbox’s attorneys have been a lot much less cavalier in regards to the penalties of shedding entry to its leased vehicles, writing, “Redbox would be compelled to terminate hundreds of jobs and would be put out of business.”

Chicken Soup for the Soul Entertainment didn’t reply to a request for remark.