Rite Aid, one of the largest drugstore chains in the US, has announced that it will close 154 stores across 15 states as part of its Chapter 11 bankruptcy restructuring plan. The company filed for bankruptcy protection on Sunday, citing the impact of the COVID-19 pandemic, the competitive pressure from rivals like CVS and Walgreens, and the mounting lawsuits over its alleged role in the opioid crisis.
The company said that it has secured $3.45 billion in new financing that will support its operations and employees during the bankruptcy process. It also said that it has reached an agreement with certain lenders and bondholders to reduce its debt by about $4.5 billion and improve its liquidity.
Rite Aid said that the store closures will affect about 7% of its total locations, which currently number more than 2,300 in 17 states. The company said that it will transfer the prescriptions and customers of the closing stores to nearby pharmacies, and that it will try to relocate the affected employees to other stores where possible.
New York State loses 20 stores, mostly on Long Island
New York State will see 20 Rite Aid stores close their doors, according to a court filing. Fourteen of those stores are on Long Island, in towns such as Floral Park, Levittown, Oceanside, Valley Stream, Bay Shore, Bellmore, Copiague, East Northport, Huntington Station, Medford, Oyster Bay, West Patchogue, Port Jefferson Station and Smithtown.
New York City will lose two Rite Aid stores in southern Brooklyn, on Ocean Avenue and Avenue U, and one in Flushing. The other three are in western New York, with two outside Buffalo in Cheektowaga and Kenmore, and the third in Rochester.
New York State is not the only one affected by the store closures. Pennsylvania, where Rite Aid is based in Philadelphia, will lose the most stores with 39. California will lose 30 stores, Michigan will lose 19, New Jersey will lose 12 and Washington State will lose 11. Other states losing stores include Connecticut, Maryland, Virginia and Ohio.
Rite Aid faces legal troubles over opioid crisis
Rite Aid’s bankruptcy filing comes as the company faces hundreds of lawsuits from state and local governments over its alleged role in fueling the opioid epidemic by illegally filling prescriptions for addictive painkillers. The company is among several defendants in a massive federal litigation that seeks to hold the pharmaceutical industry accountable for the public health crisis that has claimed hundreds of thousands of lives in the US.
Rite Aid has denied any wrongdoing and has said that it has implemented strict policies and procedures to prevent opioid abuse and diversion. The company has also said that it has cooperated with law enforcement agencies and regulators to combat the opioid problem.
However, Rite Aid has also acknowledged that the legal costs and potential liabilities from the opioid litigation have created significant financial uncertainty and risk for its business. The company said that it hopes to resolve the lawsuits through a global settlement as part of its bankruptcy process.
Rite Aid aims to emerge as a stronger company
Rite Aid said that it expects to continue operating its remaining stores and providing essential services to its customers and communities during the bankruptcy process. The company said that it plans to use the bankruptcy protection to restructure its business, optimize its store portfolio, improve its operational efficiency and enhance its customer experience.
The company said that it has received support from certain lenders and bondholders who hold about 70% of its outstanding debt for its restructuring plan. The plan is subject to approval by the bankruptcy court and other stakeholders.
Rite Aid’s CEO and chief restructuring officer Jeffrey Stein said in a statement that he is confident that the company will emerge from bankruptcy as a stronger and more competitive entity.
“With the support of certain of our lenders and the majority of our bondholders, we look forward to moving through this process and emerging as a stronger company, well-positioned for long-term success,” he said.