Rite Aid Prepares To File for Chapter 11 — Retail Bum

Pharmacy retailer Rite Aid plans to file for bankruptcy to avert mounting costs arising from lawsuits over its alleged role in the opioid crisis.

The bankruptcy filing, if approved, would cover over $3.3 billion of the retailer’s debt load, halt the lawsuits, and provide the retailer with a path forward to resolve them.

The company is the target of more than a thousand federal lawsuits consolidated in Ohio, which accuse the company of fueling the opioid endemic in the country. The U.S. Department of Justice also sued Rite Aid in March for overlooking “red flags” as it illegally filled hundreds of thousands of prescriptions for opioids and other controlled substances.

Rite Aid’s effort to file for bankruptcy would, in effect, list the plaintiffs as unsecured claimants and enable the company to refuse to pay its lease payments for stores it plans to close.

Last year, the company shuttered some 145 stores, and it closed another 27 in the quarter that ended June 3, 2023, leaving it with a footprint of 2,284 pharmacy locations. As the company prepares to file for bankruptcy, it has plans to close even more.

“We have closed 239 stores since 2021. Like all retail businesses, we regularly review each of our locations to ensure we are meeting the needs of our customers, communities, and the overall business,” the company told Yahoo News.

After the news broke, the pharmacy retail chain operator’s shares sank 51% to 71 cents. Over the past year, the company has reportedly lost 90% of its stock value. As of Friday, its market cap stood at $41 million.

Photo credit: Rite Aid

Originally published at https://retailbum.com on August 28, 2023.