Rite Aid has filed for bankruptcy as it tries to dig out from under billions of dollars in debt mainly caused by opioid lawsuits, reports the Washington Post.
The Chapter 11 filing allows the Philadelphia-based retailer to restructure its debt, which sits at $3.3 billion. Lenders have agreed to provide $3.45 billion in debt relief. Rite Aid is expected to close stores, which could be in the hundreds, but the exact amount is not known at this time.
Jefferey Stein has been appointed CEO as part of the new structuring.
“The important actions we are taking today will enable us to move ahead as a stronger company,” said Stein.
Over the last year, Rite Aid has been engulfed in opioid lawsuits. Back in March, the Department of Justice sued the retailer, accusing it of filling hundreds of thousands of prescriptions for illegal drugs including opioid between May 2014 and June 2019. The DOJ said Rite Aid was filling prescriptions for “trinities,” which is a combination of opioids, benzodiazepine, and muscle relaxants.
More recently, Rite Aid was in danger of being delisted from the New York Stock Exchange as its stock price and market capitalization has plunged. The company’s stock has lost about 80% of its value since July.
Retail shrink has not helped Rite Aid, either. During a second quarter earnings call Chief Financial Officer Matthew Schroeder losses were around $9 million higher last year.
Stein said the bankruptcy filing will allow the company to accelerate the process of closing stores.
“We look forward to working closely with our landlords to determine the best path forward for each of our stores,” said Stein.
