Rite Aid Restructuring Plan Approved, Slashes Debt
A U.S. bankruptcy judge has approved Rite Aid Corp.’s restructuring plan, setting the stage for the pharmacy retailer to stay afloat and emerge from bankruptcy.
Under the plan, which was approved by U.S. Bankruptcy Judge Michael Kaplan at a court hearing in Trenton, N.J, Rite Aid will cut its debt by about $2 billion and turn over control to its key creditors. The judge said the restructuring had saved the company from having to shut down and liquidate operations, reported Reuters. Rite Aid plans to exit from bankruptcy in about a month, funded by $2.55 billion in financing provided by its lenders, according to the report
Rite Aid filed for bankruptcy in October, listing estimated assets and liabilities in the range of $1 billion to $10 billion in its court filing. Since the filing, the company has closed hundreds of stores. (As of Feb. 29, Rite Aid operated 1,704 stores across the United States, according to its website.) It is expected to emerge from bankruptcy with about 1,300 locations.
In January, Rite Aid won court approval to sell its pharmacy benefit manager business Elixir Solutions for $575 million. In March, the company entered into an asset purchase agreement for the partial sale of its Health Dialog business to Carenet Health, a provider of healthcare engagement, clinical support, telehealth and advocacy solutions, as it continues to sharpen its focus on its retail pharmacy business.
Rite Aid's restructuring will provide $47.5 million to junior creditors, including individuals and local governments that have sued the company allegedly contributing to the deadly U.S. opioid epidemic. Before it filed for bankruptcy, Rite Aid faced 1,600 opioid lawsuits, including one by the Department of claiming that it knowingly processed “unlawful prescriptions for controlled substances,” which stands in violation of False Claims Act and Controlled Substances Act.
Philadelphia-based Rite Aid provides a wide range of convenient solutions, including retail and delivery pharmacy, as well as services offered through its wholly owned subsidiary Bartell Drugs. Employing nearly 6,000 pharmacists, the company operates more than 1,700 retail pharmacy locations across 16 states and is No. 26 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.
This article was originally covered in sister publication Chain Store Age.
