Redbox’s financial situation continues to spiral out of its control. On Thursday, a Los Angeles court entered a $16.7 million judgment against the company in favor of NBCUniversal, after Redbox failed to pay a scheduled installment of a settlement the parties reached earlier in May.

The missed payment bodes ill for the DVD kiosk company, which now owes the remaining balance in full. More importantly, the missed payment suggests the company simply did not have the requisite money on hand, and the prospect of bankruptcy may be looming for Redbox and its deeply indebted corporate parent, Chicken Soup for the Soul Entertainment. 

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

Chicken Soup took on $325 million in debt to acquire Redbox, and its financial situation has only gone downhill from there

After initially opposing the demand, Redbox settled the lawsuit with Universal in May, agreeing to pay the entire $16.7 million over three installments. An initial $4 million payment was supposed to be wired to Universal by June 10th but never arrived. As part of the terms of the settlement, Redbox agreed that if it should fail to make good, a court could enter a judgment against it for the full amount minus any payments made. After the missed payment, Universal asked the court to enforce the settlement and enter a judgment against 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 company in August of 2022, and its financial situation has only gone downhill from there. The company ended Q1 with an accumulated deficit of $937 million and is being sued by a growing number of business partners over unpaid bills.

Chicken Soup had planned to raise $175 million this spring to pay NBCUniversal, settle other lawsuits, and service debt held by its largest creditor but was unable to do so. As a result, the company defaulted on its debt in early June but didn’t immediately seek bankruptcy protection. Instead, its CEO, Bill Rouhana, proceeded to fire the company’s entire board of directors, including his own wife.

All of this is happening as Redbox is facing another imminent crisis: the company that is leasing more than 400 cars to Redbox sued over unpaid bills as well and won the right to repossess these cars in early June. Redbox informed its staff this week that it would begin to turn over a subset of these cars to the fleet company — a step that company representatives have painted as “evolv[ing] our fleet strategy” in messages to staff reviewed by The Verge.

In an earlier court filing, Redbox’s attorneys were a lot less cavalier about the consequences of losing access to its leased cars, writing, “Redbox would be compelled to terminate hundreds of jobs and would be put out of business.”

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

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