Redbox missed a multi-million dollar payment it couldn’t afford to miss

Redbox’s finances continue to spiral out of control. On Thursday, a Los Angeles court entered a $16.7 million judgment against the company in favor of NBCUniversal after Redbox failed to make a scheduled installment payment in a settlement reached between the parties in May.

The missed payment bodes badly for the DVD kiosk company, which now owes the full balance. More importantly, the missed payment shows that the company did not have the necessary funds, and the possibility of bankruptcy looms for Redbox and its heavily debt-ridden corporate parent, Chicken Soup for the Soul Entertainment.

In February, NBCUniversal accused Redbox of not paying royalties for DVD and online rentals. In your complaint Redbox stopped paying royalties “around the summer of 2022” and was due to pay out about $16.7 million in total.

After initially contesting the demand, Redbox settled the suit with Universal in May, agreeing to pay the full $16.7 million in three installments. An initial payment of $4 million was due to Universal by June 10, but never arrived. Under the terms of the settlement, Redbox agreed that if it failed to pay, the court could enter a judgment against it for the full payment minus any payment due. After the nonpayment, Universal asked the court A request to enforce the agreement and enter a judgment against Redbox and Chicken Soup was granted The order was handed down Thursday morning by Los Angeles Superior Court Judge Holly J. Fujii.

Chicken Soup for the Soul Entertainment took on $325 million in debt when it acquired the DVD kiosk company in August 2022, and its financial situation has steadily deteriorated since then. Q1 ends Its accumulated deficit is $937 million and A growing number of lawsuits are being filed Disputes with your business partners over unpaid bills.

Chicken Soup had planned to raise $175 million this spring to pay NBCUniversal, settle other lawsuits and pay off debts to its largest creditor, but was unable to do so. As a result, the company default in paying your loan in early June, but did not immediately seek bankruptcy protection. Instead, its CEO, Bill Rouhana, proceeded to set the fire The company’s entire board of directors, including his own wife.

All of this is happening as Redbox faces another imminent crisis: The company that leases more than 400 cars to Redbox has also been sued over unpaid bills and Won the right to take these cars back in early June. Redbox informed its employees this week that it would begin handing over a subset of these cars to a fleet company — a move that company representatives have characterized as “evolving”[ing] Our fleet strategy” reviewed in messages sent to employees Verge,

One Earlier court filingsRedbox’s lawyers were far less cavalier about the consequences of losing access to its leased cars, writing, “Redbox would be forced to eliminate hundreds of jobs and be forced out of business.”

Chicken Soup for the Soul Entertainment did not respond to a request for comment.