Rite Aid is preparing a Chapter 11 bankruptcy filing to restructure debts including opioid liabilities, according to people with knowledge of the matter.
Advisers to the Philadelphia, Pennsylvania-based pharmacy chain have entered confidential discussions to hash out a plan ahead of the filing, said the people, who asked not to be named because discussions are private. The company is still finalizing its plans, which could change, the people added. Rite Aid is one of the largest pharmacy chains in the US, with more than 2,200 locations.
The pharmacy chain has been working to address its debts. In March, the Justice Department argued that Rite Aid knowingly filled hundreds of thousands of unlawful prescriptions for controlled substances. The federal intervention emerged after three whistleblowers who previously worked at Rite Aid pharmacies sued the company in 2019.
Representatives for Rite Aid and company adviser Guggenheim Securities declined to comment. Representatives for company advisers Kirkland & Ellis and Alvarez & Marsal didn’t respond to requests for comment. The Wall Street Journal earlier reported that the company was preparing to file for bankruptcy in the coming weeks.
Rite Aid has more than $3 billion of long-term borrowings. Its 7.5% first-lien bonds due 2025 trade at 59.5 cents on the dollar, according to Trace. The company’s shares plunged more than 50% to as low as 66 cents on Friday.