Rite Aid, the U.S. pharmacy chain, filed for Chapter 11 bankruptcy on Sunday.
The pharmacy has undergone a restructuring effort aimed at reducing its mounting debt and addressing numerous lawsuits, all while experiencing declining sales, CNN reported. Rite Aid has secured a $3.45 billion commitment in new financing, which will help provide liquidity as the chain struggles with its debt, according to the outlet.
Rite Aid had only $135.5 million in cash on hand in June while carrying a substantial burden of long-term debt, amounting to $3.3 billion, CNN reported. This level of debt exceeded the value of the company’s assets by nearly $1 billion, and with rising interest rates, the cost of servicing the debt increased, CNN reported.
US drugstore chain Rite Aid files for bankruptcy following legal battles over opioid prescriptions. https://t.co/G1GY2DPQHF
— CNN International (@cnni) October 16, 2023
Filing for bankruptcy will allow Rite Aid to address a multitude of federal, state and local lawsuits alleging that the company oversupplied opioids. Rite Aid plans to resolve them “in an equitable manner,” the company said in a statement.
In addition to the financial restructuring, Rite Aid has also made changes in its leadership. Jeffrey Stein was appointed as the new CEO and chief restructuring officer as part of the company’s efforts to navigate the bankruptcy proceedings. Stein is the founder of Stein Advisors, a financial advisory firm that specializes in assisting troubled companies. He replaced Elizabeth Burr, a Rite Aid board member who had been serving as interim CEO since January, CNN reported. (RELATED: Video Shows Philadelphia Looters With Axes And Hammers Ransack Local Pharmacy)
Drug retailer Rite Aid files for bankruptcy, gets $3.45B commitment https://t.co/pJVRPvju5R pic.twitter.com/92fkvoutef
— New York Post (@nypost) October 16, 2023
“With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy,” Stein said in a statement, according to CNN. “In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on – now and into the future.”
Rite Aid also plans to close a substantial number of underperforming stores, potentially up to 500 out of its more than 2,100 drugstores located across the nation, The New York Post reported.