TorrentFreak Bankruptcy Court Clears Path for $100 Million Sale of Redbox’s Piracy Lawsuit Rights

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In 2024, the video rental and streaming company Redbox shut down its service and filed for bankruptcy.

The service, owned by Chicken Soup for the Soul Entertainment (now CSS Entertainment), was running hundreds of millions in losses per year and no longer saw a path to profitability.

With hundreds of filings, the bankruptcy case is a complex one. While these types of proceedings typically don’t have much news value, a rather intriguing piracy-related filing caught our eye last fall.

Court Clears Path for $100 Million Piracy Litigation Deal​

Last October, it was reported that a company called Grove Street Partners was offering at least $100 million for the copyright litigation rights of Redbox‘ bankrupt parent company.

However, before any deal could be signed and executed, the Delaware bankruptcy court first had to approve the sharing agreement that dictates how the proceeds of an eventual sale are shared. This happened earlier this month, when the agreement was formally approved by Judge Mary F. Walrath.

With the paperwork sorted, the rights to pursue copyright infringement claims of media titles once owned or controlled by CSS Entertainment and its subsidiaries, including Screen Media Ventures, can now be sold.

Grove Street remains the key candidate to take over the rights, which would allow the company to file lawsuits against Internet providers for turning a blind eye to piracy. This can potentially lead to hundreds of millions of dollars in damages, which would provide a decent return on investment.

Piracy lawsuits are familiar territory for Grove Street. In 2023, before Redbox went bankrupt, it announced a partnership with American Films and its subsidiary FACTERRA, to “provide data monitoring and record evidence” supporting copyright infringement cases.

Future ISP Piracy Lawsuits & the Supreme Court​

During a hearing at the bankruptcy court a few days ago, the trustee confirmed that while they have reached an “agreement in principle” with Grove Street, the formal purchase agreement is still being drafted and has not been executed. This means that there is no final price tag, although $100 million has been cited as the minimum.

From the sharing agreement

$100 million is a substantial amount, especially considering that these litigation rights don’t guarantee success in court. In fact, the value of those rights largely depends on a case currently before the U.S. Supreme Court.

This case, Cox Communications v. Sony Music Entertainment, asks the Court to define when an ISP can be held liable for the infringement of its subscribers.

Cox was previously hit with a $1 billion jury verdict for failing to terminate repeat infringers despite receiving millions of DMCA notices. This led to several appeals and eventually ended up at the Supreme Court, where the Internet provider found the U.S. government on its side.

The Supreme Court heard oral arguments in December 2025, and a final decision is expected to come in later this year. That decision could either cement the value of the rights at stake here, or make it much more challenging to recoup the investment.

Private Lenders Get Most Money​

The approved sharing agreement governs how proceeds will be divided between the trustee, George L. Miller, and HPS Investment Partners, the primary secured lender owed at least $500 million in principal alone.

Under the terms of the deal, the buyer of the rights will pay at least $100 million in five annual installments of $20 million each. After the trustee’s administrative costs are covered, the first $100 million in net proceeds splits 80% to the lenders and 20% to the estate. Above $100 million, the lenders’ share increases to 85%, with the estate receiving 15%

During the proceedings, a secondary lender, MidCap Financial Trust, was added as a party by the court order, and it will receive a pro-rata share of the lender share, alongside HPS.

The court also specifically preserved the rights of unions, including DGA, SAG-AFTRA, and WGA West, to ensure their outstanding payment claims remain active. However, with various parties seeking hundreds of millions in secured debt, it seems unlikely that everyone is made whole.

A Web of Legal Troubles​

Speaking with TorrentFreak, Grove Street CEO Thomas Murphy confirmed that the external funds to acquire the rights are still in place, without mentioning any financial partners by name. First, however, a purchase agreement must be finalized.

This agreement is also key for a separate lawsuit that was filed against the company by a former executive. As highlighted last October, Jamie Warren, the former CFO of both American Films and Grove Street Funding (which is linked to Grove Street Partners), sued both companies over unpaid salary in 2024.

In May, 2025, a Texas federal court entered a final judgment in favor of the former employee, granting her $525,000, plus attorneys fees and costs. Thus far, the judgment has not been paid, but that could change soon.

A day after the bankruptcy court approved the sale of litigation rights, Murphy informed the Texas court that a first payment toward the outstanding judgment will follow shortly, adding that the CSS deal is ‘the only way that reasonably happens.’

Whether the sale will eventually go through has yet to be seen, but it is clear that a lot is riding on it: for Grove Street, its former CFO, Internet providers, lawyers, movie producers, and all the claim holders in the bankruptcy proceeding.

And even if the sale goes through, the profitability of the deal will depend, in no small part, on what the Supreme Court decides in the Cox case in the months ahead.

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A copy of the order of the Delaware Bankruptcy Court, approving the sharing agreement (pdf) that effectively greenlights the deal, is available here (pdf).

From: TF, for the latest news on copyright battles, piracy and more.

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