U.S. pharmacy store Rite Aid files for bankruptcy protection amid several lawsuits
16 Oct 2023
Rite Aid filed for Chapter 11 bankruptcy on Sunday, October 15, 2023, taking a step to suspend the lawsuits against the drugstore chain related to its alleged involvement in the U.S. opioid crisis. The company has even announced the appointment of a new CEO.
Rite Aid disclosed that it received a commitment of $3.45 billion in fresh financing from certain lenders, a lifeline that would provide sufficient liquidity to navigate through the bankruptcy process. The Chapter 11 filing is anticipated to facilitate the equitable resolution of ongoing litigation claims, aside from addressing the company's financial difficulties.
Other than being burdened with lawsuits against the opioid epidemic, Rite Aid has been burdened with a total debt of $8.60 billion as of June 3, 2023. This was reported in a court filing with the U.S. Bankruptcy Court for the District of New Jersey. Some of this debt is scheduled for repayment by 2025, while the company's total assets stand at $7.65 billion.
The company has also announced the appointment of Jeffrey Stein as the new CEO and chief restructuring officer, succeeding interim CEO Elizabeth Burr. Stein has been brought onto the company's board, with Burr also retaining her position on the board.
Rite Aid plans to close most of its underperforming stores and will try to transfer affected employees to other locations where feasible. Though detailed plans have not been disclosed.
Like other pharmacy chains, Rite Aid has been accused in lawsuits of contributing to the U.S. opioid crisis. The U.S. Department of Justice filed a lawsuit against Rite Aid, alleging that it ignored "red flags" while illicitly fulfilling hundreds of thousands of prescriptions for controlled substances, including opioids.
With over 2,000 retail stores spread across 17 states in the U.S., Rite Aid remains significantly smaller than its competitors, such as Walgreens Boots Alliance and CVS Health. The Chapter 11 filing positions Rite Aid among several companies seeking bankruptcy protection due to their legal entanglements concerning the opioid crisis in the U.S.
Mallinckrodt, also mired in litigation regarding its generic opioid marketing, filed for bankruptcy in August, 2023 and is engaged in discussions with major investors regarding the potential sale of some or all of its business units.
Furthermore, Rite Aid has entered into an agreement with MedImpact Healthcare Systems for the acquisition of its Elixir Solutions business, with MedImpact serving as the 'stalking horse bidder' in a court-supervised sale process.
The company has even announced the appointment of a new CEO.
Rite Aid disclosed that it received a commitment of $3.45 billion in fresh financing from certain lenders, a lifeline that would provide sufficient liquidity to navigate through the bankruptcy process. The Chapter 11 filing is anticipated to facilitate the equitable resolution of ongoing litigation claims, aside from addressing the company's financial difficulties.
Other than being burdened with lawsuits against the opioid epidemic, Rite Aid has been burdened with a total debt of $8.60 billion as of June 3, 2023. This was reported in a court filing with the U.S. Bankruptcy Court for the District of New Jersey. Some of this debt is scheduled for repayment by 2025, while the company's total assets stand at $7.65 billion.
The company has also announced the appointment of Jeffrey Stein as the new CEO and chief restructuring officer, succeeding interim CEO Elizabeth Burr. Stein has been brought onto the company's board, with Burr also retaining her position on the board.
Rite Aid plans to close most of its underperforming stores and will try to transfer affected employees to other locations where feasible. Though detailed plans have not been disclosed.
Like other pharmacy chains, Rite Aid has been accused in lawsuits of contributing to the U.S. opioid crisis. The U.S. Department of Justice filed a lawsuit against Rite Aid, alleging that it ignored "red flags" while illicitly fulfilling hundreds of thousands of prescriptions for controlled substances, including opioids.
With over 2,000 retail stores spread across 17 states in the U.S., Rite Aid remains significantly smaller than its competitors, such as Walgreens Boots Alliance and CVS Health. The Chapter 11 filing positions Rite Aid among several companies seeking bankruptcy protection due to their legal entanglements concerning the opioid crisis in the U.S.
Mallinckrodt, also mired in litigation regarding its generic opioid marketing, filed for bankruptcy in August, 2023 and is engaged in discussions with major investors regarding the potential sale of some or all of its business units.
Furthermore, Rite Aid has entered into an agreement with MedImpact Healthcare Systems for the acquisition of its Elixir Solutions business, with MedImpact serving as the 'stalking horse bidder' in a court-supervised sale process.
