NEW YORK - Rite Aid will ask a U.S. bankruptcy court to approve its restructuring plan on Thursday, seeking to cut $2 billion in debt and turn over control of the company to a group of its lenders.
Rite Aid used its bankruptcy to close hundreds of stores, sell its pharmacy benefit company Elixir, and negotiate settlements with its lenders, drug distribution partner McKesson, and other creditors, including individuals and governments that have sued it for allegedly contributing to the deadly U.S. opioid epidemic.If the bankruptcy plan is approved, Rite Aid will emerge from Chapter 11 under the ownership of a group of lenders including investment funds Brigade Capital and HG Vora.
Before it filed for bankruptcy, Rite Aid faced 1,600 opioid lawsuits, including one by the federal government alleging that the company ignored red flags when filling suspicious prescriptions for addictive opioid pain drugs. Maryland and some opioid claimants argue that Rite Aid should not be able to pay off certain of its lenders while sweeping opioid lawsuits under the rug, and the insurers say Rite Aid is leaving them on the hook for future opioid litigation.The company stumbled under its high debt, revenue declines, increased competition, and opioid litigation, according to its court filings.