Rite Aid Files for Chapter 11 Bankruptcy Protection

Rite Aid Corporation has filed for Chapter 11 bankruptcy protection as the struggling retailer has reached an agreement on the terms of a financial restructuring plan company officials said would accelerate its ongoing business transformation.

According to a press release announcing the bankruptcy filing, implementation of the restructuring plan will significantly reduce the company’s debt, increase its financial flexibility and enable it to execute on key initiatives. They include: 

• Finalize and build consensus for the agreement in principle the company has reached with certain of its senior secured noteholders;

• Accelerate the company’s store footprint optimization plan;

• Implement a proposed transaction under which MedImpact would acquire Elixir Solutions, subject to the outcome of a court-approved marketing process;

• Access additional liquidity; and

• Resolve litigation claims in an equitable manner.

In connection with this process, Rite Aid has received a commitment for $3.45 billion in new financing from certain of its lenders. This financing is expected to provide sufficient liquidity to support the company throughout this process.

“Rite Aid has served customers and communities across our country for more than 60 years, and the important actions we are taking today will enable us to move ahead as a stronger company,” said Jeffrey S. Stein, the company’s chief executive officer, chief restructuring officer and a member of the company’s board of directors. “With the support of our lenders, we look forward to strengthening our financial foundation, advancing our transformation initiatives and accelerating the execution of our turnaround strategy. In doing so, we will be even better able to deliver the healthcare products and services our customers and their families rely on – now and into the future.”

Stein was named CEO as Rite Aid was announcing its Chapter 11 filing. He succeeds Elizabeth “Busy” Burr, who has served as interim CEO since January 2023. Burr will continue in her role as a director on the company’s board.

As part of the restructuring process, Rite Aid will also be evaluating its store portfolio to “ensure it is operating efficiently while meeting the needs of its customers, communities, and associates.” 

“The court-supervised process provides Rite Aid with legal tools to accelerate our footprint optimization in an efficient and orderly manner,” Stein said. “We look forward to working closely with our landlords to determine the best path forward for each of our stores.”

News of a possible bankruptcy filing surfaced in late September, with a report from the Wall Street Journal noting that such a move could lead to the closing of between 400 and 500 locations. As of mid-October, Rite Aid operated more than 2,300 stores across 17 states.