[Update as of July 2, 2024] U.S. Bankruptcy Judge Michael Kaplan has approved a restructuring plan for Rite Aid that would cut the retailer’s debt by $2 billion and allow it to emerge from bankruptcy with approximately 1,300 stores, according to Reuters. Rite Aid plans to exit bankruptcy in about one month’s time, financed by $2.55 billion provided by its lenders, according to Rite Aid lawyer Aparna Yenamandra.
Original story from April 1, 2024 begins —
Rite Aid has filed a restructuring plan with the U.S. Bankruptcy Court, District of New Jersey that would cut more than $2 billion in debt and keep a large portion of the retailer’s store fleet operating. If approved, the plan would transfer ownership to the drugstore’s senior bondholders and settle certain opioid overprescribing lawsuits, according to the Wall Street Journal and other media outlets. Senior bondholders would drop their claims in return for 90% of the stock in the reorganized company, while senior lenders would be paid in full, either in cash or via new loans.
The plan, which could begin being implemented as soon as later this month, also leaves open the possibility of a sale, according to Reuters. The retailer had filed for bankruptcy protection in October 2023 and received bankruptcy court approval to sell its Elixir pharmacy benefit manager (PBM) business for $575 million in January 2024, according to Reuters.
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The official committee of tort claimants for the opioid lawsuits would share with other holders of general unsecured claims a total cash amount of up to $47.5 million, paid over time, plus 10% of the company’s stock and potential proceeds from insurance claims. Last month, Rite Aid reached an agreement in principle with the Justice Department to resolve claims over allegedly filling unlawful prescriptions for controlled substances. Rite Aid also reached an agreement with McKesson, one of its key providers of pharmaceutical products, for a new contract and payments to settle McKesson’s claims for goods previously delivered.
