Rite Aid Files for Bankruptcy and Plans to Close Underperforming Stores Amidst Opioid Crisis Lawsuits
October 16, 2022 – Rite Aid, the debt-laden drugstore chain, has filed for bankruptcy protection on Sunday. The company also announced its decision to close underperforming stores amidst mounting lawsuits that allege the company’s contribution to the U.S. opioid crisis.
The bankruptcy filing will enable Rite Aid to resolve litigation claims in an “equitable manner,” according to the company. Additionally, Rite Aid has obtained a commitment of $3.45 billion from some lenders, which will provide liquidity during the bankruptcy process.
Rite Aid, founded in 1962 as a thrift shop, quickly grew to become the third largest chain of drugstores in the United States. With over 2,000 retail stores across 17 states, the company established a significant presence in the market.
However, Rite Aid faced severe backlash from lawsuits that accused pharmacies of playing a role in the oversupply of prescription opioids. The opioid epidemic has resulted in over 1 million deaths due to drug overdoses in the United States since 1999.
As of June 3, Rite Aid reported a total debt of $8.60 billion, with some of it due in 2025. The company listed its total assets at $7.65 billion in the filing with the U.S. Bankruptcy Court for the District of New Jersey.
In a move to navigate through the bankruptcy process, Rite Aid appointed Jeffrey Stein as its CEO and chief restructuring officer, replacing interim CEO Elizabeth Burr. The company also assured that employees from underperforming stores that would be closed would be transferred to other locations whenever possible.
Rite Aid follows in the footsteps of several other companies, including Mallinckrodt, that have filed for bankruptcy due to lawsuits surrounding the U.S. opioid crisis.
The repercussions of Rite Aid’s bankruptcy filing are yet to be seen. However, the company’s decision to close underperforming stores and resolve litigation claims could help it regain stability in the long run.
Reporting by Leroy Leo, Abinaya Vijayaraghavan, and Mariam Sunny in Bengaluru; Editing by Simon Cameron-Moore and Arun Koyyur.
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