One of the largest pharmacy chains in the country has taken the voluntary step of filing Chapter 11 proceedings to seek protection from bankruptcy.
On Sunday, Rite Aid announced that it had reached an agreement with its creditors regarding the details of its financial restructuring plan. This plan aims to enhance the company’s “financial flexibility” and “significantly reduce” its current debt load.
Apart from grappling with debt and a decline in sales, Rite Aid has faced a plethora of legal challenges. Over 1,000 federal, state, and local lawsuits allege that its pharmacies unlawfully dispensed numerous prescriptions for painkillers. In March, the Justice Department filed a complaint against the company, stating that it filled prescriptions for controlled substances that appeared to be unlawful and exhibited repeated warning signs of misuse. However, Rite Aid has denied these allegations.
Additionally, the company announced it obtained a commitment for $3.45 billion in fresh financing and agreements for reducing its debt within the framework of a court-supervised process. This infusion of funds is anticipated to furnish the company with the necessary financial resources to navigate through this period. Furthermore, the company intends to close certain underperforming store locations and divest certain assets as part of its strategy to “reduce the Company’s rent expense” and “strengthen its overall financial performance.”
“The company is making every effort to ensure customers of impacted stores have access to health services. Whether at another Rite Aid or a nearby pharmacy, and will work to transfer prescriptions accordingly so that there is no disruption of services,” the company stated.
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