Redbox missed a multimillion-dollar payment it couldn't afford to miss | Hacker News Reader

Redbox missed a multimillion-dollar payment it couldn't afford to miss

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26 pointscdme20 comments

They (chicken soup) bought the company a friend works at. They failed to pay their employee’s health insurance premiums, then failed to tell the employees for months. Now the employees are having all their claims revoked during that period and are having to pay them on their own.

And this is the second time they’ve done this.

WTF living in the US is such a nightmare sometimes. A company can outright defraud you like that and there will be zero consequences.

Here in Germany, if a company fails to pay social security and health insurance (but claims it did on payslip) someone is going to jail. And the law even goes beyond and stipulates that the employee will remain covered, and these kinds of payments are first priority during insolvency.

In Poland you get a notification from social security bureau that your employer did not pay your insurance on time.

> Now the employees are having all their claims revoked during that period and are having to pay them on their own.

Was it a contractual arrangement? They just have to front the money until they sue the company; they're suing as they're looking for new jobs right?

w2 employee. They'd have to get in line in small claims court because they weren't out of pocket enough to really sue.

Read between the lines; it's going bankrupt. Like the first incarnation of WeWork.

“Overnight we filed for Chapter 11 bankruptcy protection,” the message said. “In connection with the filing, we have applied for approval of a debtor in possession [DIP] loan. Upon court approval, we expect payroll to be funded early in the week and funding for this upcoming week’s payroll to also be secured. We also expect to have the funds to reinstate medical benefits back to May 14, 2024 and going forward. We will provide regular updates.”

And now they’ve missed the last round of payroll.

Why is Chicken Soup for the Soul a multimillion dollar company instead of a line of books and why did it by Redbox?

They apparently bought several other entertainment companies before Redbox: https://en.wikipedia.org/wiki/Chicken_Soup_for_the_Soul#Ente...

Who would have guessed that one day lack of DVD rentals would bankrupt Crackle?

Redbox has a streaming service, too. I joined it only to subscribe to a single movie: Final Destination 3, which I found out while working through that series is only available on the platform for some reason while all of the other films are elsewhere.

Yeah, I actually didn’t know that until I read the article. I generally don’t consider myself a good barometer of pop culture, I thought Cardi B was a Kardashian until like a year ago, but I still assume the fact that I’ve never heard of it is a bad sign.

It’s so funny how one self-help book can bloom into an empire, and then poorly manage itself into bankruptcy by jumping on a trend like streaming, but doing it too late and poorly.

“Zero interest rate policy” is the answer to both of your questions.

https://fred.stlouisfed.org/series/FEDFUNDS

When did the Fed cut rates to zero for the first time? 2008. What happened with this company in 2008?

> Expansion from books

> In 2008, the founders, Jack Canfield and Mark Victor Hansen, sold the company to a new ownership group led by William J. Rouhana and Robert D. Jacobs.[17] Since then all new titles have been published by Chicken Soup for the Soul Publishing, LLC and distributed by Simon & Schuster.[1] Under the new ownership group, Chicken Soup for the Soul has expanded into other products besides books. The company markets pet foods under the brand Chicken Soup for the Pet Lover's Soul and a line of soups, sauces and other prepared foods under the brand Chicken Soup for the Soul.[18]

ZIRP ending also happens to be the reason that Chicken Soup for the Soul Entertainment is facing bankruptcy.

> On May 11, 2022, Chicken Soup for the Soul announced its intention to acquire Redbox for $357 million ($36 million in stock and $321 million in assumed debt).[28] The acquisition closed on August 11, 2022.[29]

> On April 23, 2024, Chicken Soup for the Soul announced a $636.6 million loss in 2023, and warned that without any options to generate additional financing, the company may be forced to liquidate or pause operations, and seek a potential Chapter 11 bankruptcy protection filing.

Let’s see when the Fed starting hiking rates

> March 2022

> When did the Fed start raising rates? The Fed hiked interest rates a total of 11 times between March 2022 and January 2024.

Whoever down voted you is a fool. You precisely answered the question and reasons why.

Good points. Even a DVD company could look like a good investment under ZIRP. Many were lured into the gamble that those good times would last forever.

FEDFUNDs is the rate at which banks lend to each other only for overnight balancing of books; it is not the rate at which companies like CSFS can borrow money.

> Let’s see when the Fed starting hiking rates

>> March 2022

Except that is not true. Look at your own graph - it was raised continually from 2015 through fall 2019.

And if ZIPR was somehow responsible for such a fall, then you'd see it across a ton more companies, since they all play in the same financial environment. Yet those are not there - 2022-2024 has been spectacularly good for companies.

I think your ZIPR is a boogeyman looking for post rationalization.

If you look at their SEC filings, you can see an actual reason: they invested in buying media companies, like Redbox, that have not panned out well at all. They bought Redbox thinking DVD rentals from corner stores was going to see a resurgence, and it has not, across many such companies.

You can also see how these were financed from the SEC filings. Guess who is not there? That's right, ZIRP funding. All stock transfer for the buy has zero borrow from banks (which again, don't lend at Fed rates, and certainly not at that rate to a company buying an already failing Redbox).

Unless you want to blame consumers preferring streaming over disks on ZIRP, your argument lacks merit in light of actual business filings and investor reports, none of which mention Fed boogeymen.

Interesting thing about firing the board. Doesn’t that trigger the severence Clause and allow them to jump the payout line when inevitably the company goes bankrupt. Seems like that’s exactly what you would do if your wife was on the board and the company was going down

Complaint: https://www.papermark.io/view/clu0wo6iw000611jg4c636v59

Redbox is like MoviePass.

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