Philadelphia-based chain pharmacy Rite Aid has filed for Chapter 11 bankruptcy, initiating a substantial restructuring effort aimed at reducing its substantial debt amidst declining sales and numerous lawsuits. The company secured a commitment for $3.45 billion in new financing to bolster its liquidity while facing a debt burden of over $8.6 billion.
This bankruptcy filing enables Rite Aid to address over a thousand federal, state, and local lawsuits alleging the excessive supply of opioids in a fair and equitable manner, as stated in a company release. Alongside the filing, Rite Aid has appointed a new CEO and chief restructuring officer, Jeffrey Stein. He is the founder of Stein Advisors, a financial advisory firm specializing in revitalizing struggling companies. Stein will replace Elizabeth Burr, a Rite Aid board member who had been serving as interim CEO since January.
Rite Aid expressed optimism about its future despite the challenges. "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," said Stein in a statement. He emphasized the company's commitment to providing essential healthcare products and services to its customers and their families both now and in the future.
As part of its restructuring plan, Rite Aid will close up to 500 underperforming stores, a significant portion of its 2,100+ drugstores located nationwide.