Chicken Soup for the Soul Entertainment failed to meet the terms outlined by its primary creditors in an April debt forbearance agreement, despite several extensions, a company 8-K/A filing to the SEC last week reported.
And on Monday, another 8/-K filing revealed that William J. Rouhana, chairman and CEO of the troubled Redbox parent company, dismissed everyone from the board of directors save for himself.
These developments would seem to indicate a near certain bankruptcy for Chicken Soup Entertainment, which in 2022 entered into what has turned out to be a disastrous deal to acquire DVD kiosk operator Redbox and take on $325 million in debt in the process.
In April, the company carved out a last-ditch forbearance agreement with its primary lenders, which would allow Chicken Soup to try to generate $175 million through "one or more sales leaseback transactions."
Also read: Chicken Soup for the Soul Raises $175 Million, Hopes to Avoid Bankruptcy
Upon the successful raising of that $175 million, Chicken Soup was to immediately pay $75 million towards its debt. As of June 10, after several extensions, the company was apparently unable to come up with the proceeds, per its SEC filing.
Monday's 8-K filing says that, "Under Section 141(k) of the Delaware General Corporation Law, (DGCL), 'any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors' except in limited cases.
"On June 11, 2024, Chicken Soup for the Soul Entertainment, Inc. (the 'Company') was notified that the holder of more than 75% of the voting power represented by the Company’s outstanding Class A and Class B common stock had acted by written consent under the DGCL to remove without cause all members of the Company’s board of directors and the board of directors or board of managers of each subsidiary of the Company, other than William J. Rouhana, Jr."
In its belated April 29 10-K filing, Cos Cob, Connecticut-based Chicken Soup reported a net loss of $636.6 million for 2023 versus $111.2 million in 2022. The company said that without the ability to somehow generate additional financing, it would "likely require us to diminish or halt operations and seek protection under applicable bankruptcy laws.”
