Rite Aid (RAD.N) announced a new CEO and filed for Chapter 11 bankruptcy Sunday. This action would put an end to lawsuits the drugstore company is facing about its claimed contribution to the U.S. opioid problem. According to Rite Aid, several lenders have agreed to provide $3.45 billion in additional funding, giving them the necessary liquidity to see them through bankruptcy.
According to the corporation, Rite Aid can settle legal claims ” equitably” due to the Chapter 11 filing.
According to a court filing with the U.S. Bankruptcy Court for the District of New Jersey, the drugstore chain has been battling with total debts of $8.60 billion as of June 3, in addition to the opioid cases, some of which is scheduled to be reimbursed in 2025. Rite Aid also disclosed $7.65 billion in total assets.
Rite Aid replaced interim CEO Elizabeth Burr with Jeffrey Stein as its new CEO and chief restructuring officer. Burr will continue to serve on the board, and the business announced Stein has been nominated to it. Rite Aid said that it will be closing more of its failing sites and, if feasible, moving the staff from the affected shops to other locations. Rite Aid has been cited as a defendant in lawsuits that claim other drugstore companies, including Rite Aid, have contributed to the U.S. opioid problem.
The U.S. Department of Justice sued Rite Aid for allegedly ignoring “red flags” while unlawfully filling hundreds of thousands of prescriptions for prohibited narcotics, including opioids.
Although it is far smaller than competitors like Walgreens Boots Alliance (WBA.O) and CVS Health (CVS.N), the firm has more than 2,000 retail outlets throughout 17 states in the U.S. Rite Aid has joined several businesses that have filed for bankruptcy under Chapter 11 as a result of litigation related to the U.S. opioid crisis.
Mallinckrodt, also being sued for marketing generic opioids, filed for its second bankruptcy in August and is negotiating the sale of parts or all of its business divisions with significant investors.
Rite Aid and MedImpact Healthcare Systems reached an agreement for Rite Aid to purchase the Elixir Solutions division. In a selling procedure that the court is overseeing, MedImpact will operate as the “stalking horse bidder.”
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