Pharmacy giant Rite Aid, which has a storefront at 6420 Rio Linda Blvd, has secured judicial approval to initiate voting on a bankruptcy reorganization strategy. This plan could see the majority of the firm’s equity transferred to bondholders while still entertaining potential sale prospects. During a judicial session in Trenton, New Jersey, U.S. Bankruptcy Judge Michael Kaplan endorsed Rite Aid’s voting scheme, emphasizing the urgency of progressing with the bankruptcy proceedings to sidestep escalating costs that might force the company into liquidation.
Initiated in October amidst a $3.3 billion debt challenge, the Pennsylvania-based chain has shuttered many stores already. The updated bankruptcy blueprint, green-lighted recently, proposes a $2 billion debt reduction and allocates approximately $47.5 million to subordinate creditors, among them individuals and local governments embroiled in litigation against Rite Aid over its opioid handling.
While Rite Aid denies and rebuffs any misconduct in the opioid-related allegations, it is ironing out settlement terms within the reorganization framework, including a pact poised to conclude a probe by the U.S. Department of Justice into the company’s opioid distribution practices.
The company, entangled in over 1,600 lawsuits alleging negligence in monitoring opioid prescriptions, has found common ground with opioid creditors regarding the bankruptcy settlement’s conditions, as articulated by Rite Aid’s legal representative Aparna Yenamandra. Exclusive voting rights have been granted to bondholders in this bankruptcy scenario, with a deadline set for April 15. Success in the voting phase would pave the way for the final judicial endorsement of Rite Aid’s bankruptcy restructuring by April 22.
Update:
In bankruptcy filings made this week, Rite Aid said they would be closing two additional stores in the Sacramento area… Rite Aid’s store at 7211 Elk Grove Blvd. in Elk Grove will close on May 20, and 5610 Stockton Blvd. in Sacramento is also scheduled to close on May 20. The company stated it has neither made nor confirmed any decisions on additional specific store closures at this time.
