One of the last companies hanging on to the DVD rental business is going the way of Blockbuster and other rental places.
Chicken Soup for the Soul Entertainment has changed its original Chapter 11 bankruptcy filing to a Chapter 7 liquidation after lenders said they are not willing to risk putting money into the business any longer, The Wall Street Journal reported.
The company has almost $1 billion in debt to more than 500 creditors including, Walmart, Walgreens, Warner Bros. Home Entertainment and Sony Pictures Television, The Wall Street Journal reported last week when it filed for Chapter 11.
The move will see the layoff of all workers — about 1,000 employees —and the shutdown of both the Redbox streaming services and 24,000 DVD rental kiosks.
At one point there were 43,000 kiosks across the U.S. and Canada, according to Variety. They offered television shows, movies and video game rentals.
Judge Thomas Horan said he would grant the request for changing the filing.
He said the company cannot pay their employees or bills and that a trustee is needed to oversee the process and investigate the company, including looking for issues concerning the money that is held in trust for employees.
Horan said, “1,000 people are about to lose their jobs and they’re not even going to be paid for work that they did,” The Wall Street Journal reported.
Deadline reported that the employees had not been paid for almost a month and that medical benefits were not being paid, despite employees paying premiums. The company did not pay its healthcare provider Anthem.
The employees will not receive severance or benefits, Variety reported.
While Chicken Soup for the Soul Entertainment shares the name with its namesake, the company that publishes the inspirational book series is not part of the bankruptcy.
Chicken Soup for the Soul purchased Redbox in 2022 and took on about $360 million in debt for the deal.
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