Rite Aid Files for Chapter 11 Bankruptcy

After dealing with dropping sales, underperforming stores, and the fallout from opioid-related lawsuits, Rite Aid announced that it filed for Chapter 11 bankruptcy and reorganization of the company. The US Bankruptcy Court agreed to Rite Aid’s proposed schedule, setting February 20, 2024, as the date of the hearing.¹

The bankruptcy filing comes on the heels of Rite Aid’s 2022 settlement of up to $30 million to resolve lawsuits alleging that its pharmacies had contributed to the current opioid crisis in the US. Bankruptcy documents reveal that Rite Aid closed over 200 struggling pharmacies in recent years and is looking at more closures of underperforming stores. In a recent statement, the company noted that Rite Aid “regularly evaluates its store portfolio to ensure it is operating efficiently while meeting the needs of its customers, communities, and associates. In connection with the court-supervised process, the Company will continue assessing its footprint and close additional underperforming stores. These efforts will further reduce the Company’s rent expense and are expected to strengthen its overall financial performance.”¹

The company also announced that it had secured a commitment for $3.45 billion in new financing to support business operations. Rite Aid employs over 6100 pharmacists and operates in more than 2100 retail pharmacy locations. In its statement, Rite Aid also said that it would transfer affected employees at impacted stores to other Rite Aid locations where possible.²

References

1. Case 23-18993-MBK (U.S. Bankruptcy Court District of New Jersey 2023). Accessed November 15, 2023. https://restructuring.ra.kroll.com/RiteAid/Home-DocketInfo?DocAttribute=4678&DocAttrName=PLANDISCLOSURESTATEMENT_Q&MenuID=10500&AttributeName=Plan%20%26%20Disclosure%20Statement
2. Rite Aid Takes Steps to Accelerate Transformation and Position Company for Long-Term Success. Accessed November 15, 2023. https://assets-global.website-files.com/64ff31f808473ca4e9e176e6/652d3064c8f4c1ef24fbb207_Rite%20Aid%20Takes%20Steps%20to%20Accelerate%20Transformation%20and%20Position%20Company%20for%20Long-Term%20Success.pdf