In a second stint in bankruptcy within a year, Rite Aid Corp. has announced that it is seeking Chapter 11 protection and will attempt to arrange a strategic sale of substantially all of its assets to maximize its remaining value for stakeholders.
The company filed its Chapter 11 petition in the United States Bankruptcy Court for the District of New Jersey. The most recent filing comes after Rite Aid emerged from bankruptcy protection in September 2024, after almost a year in Chapter 11 proceedings and shedding $2 billion in debt. In 2015, Walgreens attempted to acquire Rite Aid but abandoned the attempt under government scrutiny. Walgrees wound up purchasing about 2,000 Rite Aid stores in the aftermath. Given that Walgreens and CVS have suffered business setbacks recently and closed stores, an outright sale to either seems unlikely, although a liquidation could encourage them and other retailers to pick up select Rite Aid locations.
Rite Aid stated that it would continue to offer pharmacy services, including prescriptions and immunizations. On May 6, the company website did not allow access to over-the-counter drugs or general merchandise. On the site, Rite Aid posted notices saying it would no longer issue reward points for qualifying purchases and that all accrued points and BonusCash would expire per standard terms and conditions. However, the company added that, starting June 5, it would no longer honor Rite Aid gift cards, nor would it accept any returns or exchanges.
Rite Aid noted that, in connection with the sale process and court-supervised proceedings, it would make efforts to facilitate a smooth transfer of customer prescriptions to other pharmacies. Rite Aid employees assisting with the process continue to receive pay and benefits.
To support the potential sale, which the company intends to conduct under section 363 of the U.S. Bankruptcy Code, which allows a business to use, sell or lease property outside the course of the ordinary operations, Rite Aid has secured commitments from certain of its existing lenders to access $1.94 billion in new financing, it pointed out. The company maintained that the financing and cash from operations should provide sufficient enterprise funding during the bankruptcy process. Rite Aid expects to divest or monetize any assets that are not sold through the court-supervised bankruptcy process.
In announcing the Chapter 11 filing, Matt Schroeder, Rite Aid CEO, said, “For more than 60 years, Rite Aid has been a proud provider of pharmacy services and products to our loyal customers. While we have continued to face financial challenges, intensified by the rapidly evolving retail and healthcare 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.”
