Drugstore chain Rite Aid is reportedly negotiating with creditors on a Chapter 11 plan that would include liquidating a hefty number of its 2,100-store fleet, according to the Wall Street Journal.
People familiar with the situation revealed that Rite Aid proposed closing 400 to 500 stores, and then either selling the remaining stores or handing over operations to creditors.
News of a looming bankruptcy came approximately four weeks ago, when Rite Aid had to face more than 1,000 federal lawsuits related to its role in the sale of opioids, equating to $3.3 billion in debt. The retailer also had to face multiple state lawsuits and one filed by the U.S. Department of Justice, which alleged the retailer violated the False Claims Act and Controlled Substances Act. Rite Aid asked the courts to dismiss the DOJ case, denying allegations that it filled unlawful opioid prescriptions.
By filing for bankruptcy, the retailer will free itself from several stores that are “stuck in uneconomical long-term leases that the company can’t get out of,” according to the WSJ. Sources also revealed that Rite Aid plans to auction off its Elixir pharmacy unit and other valuable parts of the business. While three pharmaceutical manufacturers — Purdue Pharma, Endo International and Mallinckrodt — have filed for bankruptcy to resolve opioid litigation, Rite Aid would be the first pharmacy chain to seek Chapter 11 protection. Walgreens and CVS reached financial settlements for similar suits in November 2022.