Debt-laden Rite Aid has filed for bankruptcy protection as the drugstore chain faces mounting pressure from lawsuits linking it to the opioid crisis in the United States. The company announced that it would be closing underperforming stores as part of its efforts to resolve litigation claims.
Rite Aid, which started as a thrift shop in 1962, quickly became one of the largest drugstore chains in the US with over 2,000 retail stores across 17 states. However, the company has faced legal challenges accusing it of contributing to the oversupply of prescription opioids, which has played a significant role in the opioid crisis that has resulted in over 1 million deaths in the country since 1999.
The filing for bankruptcy protection will allow Rite Aid to address the lawsuits in an “equitable manner”. The company has secured a commitment of $3.45 billion from some lenders, which will provide liquidity during the bankruptcy process. Rite Aid listed a total debt of $8.60 billion and total assets of $7.65 billion as of June 3, according to documents filed with the U.S. Bankruptcy Court for the District of New Jersey.
To navigate through this challenging period, Rite Aid has appointed Jeffrey Stein as its new CEO and chief restructuring officer, replacing interim CEO Elizabeth Burr. The company also plans to transfer employees from underperforming stores that will be closed to other locations whenever possible.
Rite Aid is not the only company facing bankruptcy due to lawsuits related to the opioid crisis. Mallinckrodt is among the other companies that have taken this step to address legal challenges.
The bankruptcy filing marks a significant development in Rite Aid’s history. The company will now have an opportunity to address its legal liabilities and restructure its operations to bounce back from its financial struggles. It remains to be seen how Rite Aid will navigate through this bankruptcy process and regain stability in the highly competitive pharmacy industry.
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