Posted by msmash from the end-of-road dept.
DVD kiosk-rental business Redbox is all set to close the shutter. LowPass: The judge overseeing the bankruptcy case of Redbox’s corporate parent Chicken Soup for the Soul Entertainment granted the debtors request to convert it from a Chapter 11 bankruptcy to a Chapter 7 bankruptcy, effectively paving the way for shutting down the company and liquidating its assets. Chicken Soup for the Soul Entertainment’s CEO Bart Schwartz, who had only joined the company two weeks ago, stepped down this morning for unrelated reasons, according to the attorney representing the debtors in the case.
Companies use Chapter 11 bankruptcy cases to reorganize, allowing them to continue to operate while they rid themselves of debt, while a Chapter 7 bankruptcy generally results in a trustee selling off company assets to pay creditors, and winding down the company. “There is no means to continue to pay employees, pay any bills, otherwise finance this case. It is hopelessly insolvent,” United States bankruptcy judge Thomas Horan determined during a hearing Wednesday, adding: “Given the fact that there may also be at least the possibility of misappropriation of funds that were held in trust for employees, there is more than ample reason why this case should be converted. So I am going to grant the motion.”
The firm operates a network of 24,000 DVD rental kiosks.
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