Rite Aid Files for Bankruptcy as the Firm Resorts to Closing Some of Its Stores

On Sunday, Rite Aid, an American drugstore, filed for bankruptcy as the firm plans to close some of its stores across the United States as it suffers a decline in sales and opioid lawsuits.

In recent years, Rite Aid has struggled to keep up with bigger drugstore chains like CVS and Walgreens as it faces lawsuits concerning allegations that it aided in increasing the opioid epidemic.

Also, there have been rumours that the company plans to file for bankruptcy at the end of August due to the company having billions of dollars in debt, the decline in sales, and more than a thousand lawsuits from federal, state, and local lawsuits claiming that the company gave thousands of illegal prescriptions for painkillers.

What Does Chapter 11 Bankruptcy Protection Mean for Rite Aid?

The Chapter 11 bankruptcy protection that Rite Aid filed in New Jersey means that the company will continue in business as it works through restructuring its debts through a court-controlled process. The company said in a statement it released on Sunday that it has raised $3.45 billion in financing from lenders as it continues operating even as the firm files for bankruptcy.

From the data, the last time the company filed a financial report was in June—-it also shows that the health business had $3.3 billion in debt when compared to the $135.5 million in cash it has available.

In the statement about the Chapter 11 filing, Rite Aid said it has plans to close some of its underperforming stores as part of its restructuring plan.

What to Know About Rite Aid Store

Rite Aid was founded in 1962 in Philadelphia and has been one of the country's largest pharmacy stores, with more than 2,000 stores in 17 states.

However, Rite Aid has told its customers that filing for bankruptcy should not stop anyone from shopping or filling prescriptions at their local store unless the store is closed. The company has closed some stores in the past few months as a way of maintaining supply and providing customers with the best.

• Rite Aid regularly evaluates its store portfolio to ensure it is operating efficiently while meeting the needs of its customers, communities, and associates.

• These efforts will further reduce the company’s rent expenses and are expected to strengthen its overall financial performance.

Although it's not clear the number of stores that will be closed, the spokesperson for Rite Aid, Joy Errico, didn’t give details concerning this topic during an interview with USA TODAY.

The company went on to say in the statement released that the company will tell customers the stores that will be closed and ensure that they assist customers in getting services they need at other nearby locations. Rite Aid also said that employees at those closed stores will be transferred "where possible”.

Rite Aid Plans

Rite Aid plans to utilize the bankruptcy to settle its legal disputes and sell some of its business, including prescription benefit manager Elixir Solutions, which it bought in 2015 for $2 billion.

As part of the bankruptcy plan, Rite Aid appointed on Sunday a new CEO to lead restructuring, Jeff Stein, who will also serve as a member of its board. Elizabeth Burr had been serving as interim CEO since January and will remain on the company’s board, Rite Aid said.

Why the Opioid Lawsuits

Rite Aid is facing legal problems due to its key role in fueling the nationwide deadly abuse of opioids, and this has led to the firm running into huge debt.

The multitude of lawsuits filed against Rite Aid accuses the company of intentionally prescribing addictive painkillers that did not meet legal requirements. In March 2023, the Justice Department filed a lawsuit against Rite Aid for selling addictive painkillers that violated the Controlled Substances Act