The Rite Aid pharmacy chain filed for bankruptcy Sunday, initiating a Chapter 11 bankruptcy protection process. The company revealed that it plans to close "underperforming stores" as it carries out a $3.45 billion restructuring plan. As explained in a press release, the company:
Reaches agreement in principle with key creditors on the terms of financial restructuring plan ... Initiates voluntary Chapter 11 process to implement a consensual financial Restructuring that will significantly reduce debt and enable execution of key initiatives ... Receives commitment for $3.45 billion in new financing to support business operations.
The company has declared bankruptcy due to declining sales, among other factors. It has also faced a number of lawsuits for allegedly providing illegal prescriptions for controlled substances, such as opioids.
According to the company, implementing the restructuring plan will "significantly reduce the Company’s debt" and will be able to "resolve litigation claims in an equitable manner."
DOJ complaint and the future of the company
The Department of Justice (DOJ) filed a complaint against the company in March of this year. According to Axios, the DOJ alleged in the complaint that, from May 2014 to June 2019, Rite Aid filled hundreds of thousands of prescriptions "that were medically unnecessary, lacked a medically accepted indication, or were not issued in the usual course of professional practice." This lawsuit is just one of those that remain unresolved.
The company, which has more than 2,100 pharmacies in 17 states, revealed that it is currently carrying out the process of paying salaries to its workers and taking care of other costs.
The company previously reported that it had recorded a loss of $306.7 million in the second quarter of 2023. Its revenue fell to $5.7 billion from $6 billion last year.
