PHILADELPHIA — Rite Aid Corp. has begun closing stores as it seeks to sell its remaining assets.
While it has not given an end date for operations, a number of stores have posted closing signs. The final rounds of closures are expected by midyear. A list of initial closings presented in bankruptcy court has 47 stores on it. The chain had around 1,240 stores in early May, including more than 300 in both California and Pennsylvania.
A lawyer for Rite Aid said that rumors about stores “going dark” immediately, especially in New York, where the retailer has over 170 units, were “not true.”
The company received court approval in May for a speedy sale of its assets in connection with a new Chapter 11 bankruptcy filing. Judge Michael Kaplan authorized an expedited sale at a court hearing in Trenton, N.J., saying that Rite Aid must quickly get buyers in place for a smooth transfer of pharmacy services for 8 million customers. Final approval for a sale or sales will be sought at a May 21 hearing.
Rite Aid filed for bankruptcy protection earlier in the month for the second time in less than two years.
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The company said it was working to transfer prescriptions to other pharmacies. Employees assisting with this process will continue to receive pay and benefits.
“For more than 60 years, Rite Aid has been a proud provider of pharmacy services and products to our loyal customers,” said chief executive officer Matt Schroeder. “While we have continued to face financial challenges, intensified by the rapidly evolving retail and health care landscapes in which we operate, we are encouraged by meaningful interest from a number of potential national and regional strategic acquirers. As we move forward, our key priorities are ensuring uninterrupted pharmacy services for our customers and preserving jobs for as many associates as possible.”
“I will be forever grateful to our thousands of associates for their commitment to Rite Aid and its mission, and I thank our entire team — from store associates to corporate employees — for their dedication to our customers and our company. With their support, we have played a critical role in supporting the health care needs of countless Americans across the communities that we are honored to serve.”
To support it during its sale process, which the company intends to conduct under section 363 of the U.S. Bankruptcy code, Rite Aid has secured commitments from certain of its existing lenders to give it $1.94 billion in new financing. This financing, along with cash from operations, is expected to provide sufficient funding during the sale. The company intends to divest or monetize any assets that are not sold through the court-supervised process. Rite Aid has filed a number of customary motions with the court seeking authorization to support operations, including continued payment of employee wages and benefits.
.In a memo to employees announcing the liquidation, Schroeder said the company will also cut jobs at its corporate offices, according to Bloomberg.
The company filed for Chapter 11 in October 2023, citing $750 million in losses and $24 billion in revenue for the fiscal year ended March 2023. At the time, it operated over 2,000 stores and employed around 47,000 people. It emerged from bankruptcy in September as a private company, having closed hundreds of stores and sold its pharmacy benefits manager, Elixir, and reached settlements with creditors..
Rite Aid’s struggles stem from a range of challenges, including legal liabilities from opioid-related lawsuits. Last year, the company reached a settlement with the Department of Justice over allegations it filled unlawful prescriptions violating the False Claims Act and Controlled Substances Act.
