One of the largest U.S. drugstore chains, Rite Aid, will close about 500 stores nationwide while it negotiates a plan to file for Chapter 11 bankruptcy.
The Wall Street Journal reported that the country’s third-largest company plans to close stores and either sell the remaining operations or let creditors take over.
The outlet reported that a group of bondholders would prefer to liquidate a large number of their branches, with both sides discussing how many branches to close.
The Journal previously reported that Rite Aid is considering filing for bankruptcy and is struggling with more than $3.3 billion in debt.
In addition to the debt problem, the chain also faces federal lawsuits alleging the company oversupplied opioids, including fentanyl.
Pedestrians walk past a Rite Aid store in Oakland, California, USA on April 1, 2015
A Chapter 11 filing would allow the company to keep the business afloat by restructuring and paying off creditors over time.
The Philadelphia-headquartered chain has also closed several stores in the area in recent months.
Wendell Young, president of Local 1776, a union that represents Rite Aid workers, told 6 ABC, “People have to go further for their pharmacies when the company doesn’t have the resources to provide adequate staffing.”
“You will encounter longer lines and there will likely be some challenges getting things on time.”
“They are mostly women. “Hard-working women who took these jobs part-time while supporting their families and who really run these businesses.”
A Chapter 11 filing would cover Rite Aid’s debts and pending legal allegations, sources told the Journal, and would close about a quarter of its 2,100 locations.
Rite Aid forecasts it will generate losses of “approximately $650 million to $680 million” next year.
In a statement, the company told NBC News that it “continues to work constructively with our financial stakeholders to determine the best path to reduce our debt and position the company for continued success.”
The company faces a significant number of cases in state court alleging it contributed to the opioid epidemic.
In March, the Justice Department announced that it had filed a complaint as part of a whistleblower lawsuit against Rite Aid.
The Justice Department alleges that Rite Aid knowingly filled unlawful prescriptions for controlled substances.
At the time, Attorney General Merrick B. Garland said, “The Department of Justice is using every tool at our disposal to address the opioid epidemic that is killing Americans and destroying communities across the country.”
Wendell Young, president of Local 1776, a union representing Rite-Aid employees, said most of the people affected are predominantly women
Attorney General Merrick B. Garland attends a press conference in Stockholm, Sweden, June 21, 2023
“This includes holding companies like Rite Aid accountable for knowingly issuing unlawful prescriptions for controlled substances.”
Assistant Attorney General Vanita Gupta added, “According to our complaint, Rite Aid pharmacists repeatedly filled prescriptions for controlled substances with obvious warnings, and Rite Aid intentionally deleted internal notes about suspicious prescribers.”
“These practices opened the floodgates for millions of opioid pills and other controlled substances to flow illegally from Rite Aid’s stores.”
The complaint alleges that Rite Aid knowingly filled hundreds of thousands of unlawful prescriptions over the course of five years.
According to the government, these prescriptions also included prescriptions for opioids, including oxycodone and fentanyl.
Rite Aid has asked a court to dismiss the department’s lawsuit, denying allegations that it wrote unlawful prescriptions for controlled substances.
According to The Journal, a bankruptcy filing would put those lawsuits on hold and give Rite Aid the opportunity to resolve them in a single forum.
has reached out to Rite Aid for comment.
In addition to Rite Aid, CVS will close hundreds of stores across the country as part of a complete retail shakeup.
The major drugstore chain is nearing the end of a policy introduced in 2021 that will see it close 300 stores each year – meaning 900 stores will be closed by 2024.