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Pharmacy giant Rite Aid is negotiating the terms of a bankruptcy plan that could result in a significant portion of its more than 2,100 drugstores permanently closing, according to a report.
People familiar with the company’s discussions with creditors told the Wall Street Journal that Rite Aid has proposed closing up to 500 insolvent stores and either selling the remaining stores or letting creditors take them over.
A group of bondholders wants to close a larger number of branches, and there is ongoing discussion about the number of branches to close, the Journal reported.
| ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| WHEEL | RITE AID CORP. | 0.59 | -0.05 | -8.33% |
| WBA | WALGREENS BOOTS ALLIANCE INC. | 12/21 | -0.33 | -1.54% |
| CVS | CVS HEALTH CORP. | 71.15 | -0.74 | -1.03% |
As discussions are ongoing, no decisions have been made at this time, Rite Aid said in a statement to Portal.
RITE AID prepares to file for bankruptcy: REPORT
A person enters a Rite Aid store in Los Angeles, California on December 22, 2021. (Mario Tama/Getty Images / Getty Images)
The Philadelphia-based company operates more than 2,330 stores in 17 states, although it is much smaller than competitors such as Walgreens Boots Alliance and CVS Health.
The Wall Street Journal previously reported that Rite Aid plans to file for bankruptcy as the company faces more than $3.3 billion in debt and over a thousand federal lawsuits over its alleged role in the opioid epidemic.
The company’s multibillion-dollar debt load and outstanding legal allegations that it oversupplied prescription painkillers will be covered by the Chapter 11 filing, the report said last month.
A spokesperson for Rite Aid told FOX Business that the company “does not comment on rumors and speculation.”
DOJ Sues RITE AID FOR ALLEGED INVOLVATION IN OPIOID CRISIS
A woman shops at a Rite Aid store. (Portal/Lucas Jackson/File Photo / Portal Photos)
The U.S. Department of Justice filed a lawsuit against Rite Aid earlier this year, alleging that the company knowingly filled “unlawful prescriptions for controlled substances” in violation of the False Claims Act and the Controlled Substances Act.
As the Journal reported, Rite Aid has denied allegations that it wrote illegal prescriptions. A bankruptcy filing would also stop those lawsuits for now and give the company another way to resolve them, the newspaper said.
The Journal reported that bankruptcy would also be the easiest way for Rite Aid to abandon a number of its stores that are trapped in uneconomic long-term leases.
Rite Aid plans to hold an auction to sell its Elxir pharmacy unit and other valuable corporate assets, the report said.
DRUG DEALER CONTRIBUTED TO OPIOID CRISIS BY IGNORING SIGNALS OF ABUSE, FED SAYS
Attorney General Merrick Garland alleges that Rite Aid knowingly filled hundreds of thousands of unlawful prescriptions. ((Photo by Chip Somodevilla/Getty Images) / Getty Images)
The Justice Department filed a lawsuit against Rite Aid in March, alleging the company “knowingly” contributed to the opioid crisis.
The DOJ lawsuit alleges that Rite Aid violated the False Claims Act and the Controlled Substances Act by “knowingly” issuing unlawful prescriptions for medications.
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Rite Aid has filed a motion to dismiss the Justice Department’s lawsuit, denying allegations that it filled illegal prescriptions.
Fox News’ Anders Hagstrom, Daniella Genovese and Portal contributed to this report.