Rite Aid is working with creditors on terms of a bankruptcy plan that would include shutting down hundreds of its stores throughout the United States, as the company grapples with more than $3.3 billion in debt, people familiar with the matter told the Wall Street Journal.
Rite Aid, which operates more than 2,330 stores in 17 states, has proposed to shut down 400 to 500 of its stores and either sell its remaining operations or allow creditors to take over in a bankruptcy plan, the Journal reports.
People who spoke to the Journal said a group a bondholders would prefer to liquidate more stores, and that the two sides are still in discussions over just how many stores would be closed. Rite Aid also intends to conduct an auction process to try and sell its Elixir pharmacy unit and other parts of the business, the Journal reports.
Rite Aid currently faces more than $3.3 billion in debt from more than 1,000 federal lawsuits alleging the pharmacy chain oversupplied opioids. The majority of those lawsuits have been consolidated into a multidistrict suit in Ohio.
The pharmacy chain is also facing similar lawsuits in state courts alleging it contributed to the opioid epidemic, as well as a civil suit brought by the Department of Justice (DOJ) alleging Rite Aid violated the False Claims Act and Controlled Substances Act in its distribution of controlled substances. Rite Aid has asked courts to dismiss DOJ's lawsuit and denied that it unlawfully filled opioid prescriptions.
In a potential bankruptcy, the litigation claims are expected to be treated as unsecured, and secured creditors will be paid first from any recoveries provided by Rite Aid, the Journal reports.
A spokesperson for Rite Aid responded to the report saying, "Given the conversations remain ongoing, no decisions have been made at this time and we are focused on reaching an agreement with our financial stakeholders that will make Rite Aid stronger." (Gladstone/Scurria, Wall Street Journal, 9/22; Reuters, 9/22; Pequeño, Forbes, 9/22)
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