Rite Aid filed for Chapter 11 bankruptcy on Sunday, a move that would halt lawsuits the drugstore chain is facing over its alleged role in the U.S. opioid crisis and named a new CEO.
Rite Aid said it has received a commitment for $3.45 billion in new financing from some of its lenders, which will provide enough liquidity to support it through the bankruptcy process.
The Chapter 11 filing will also allow Rite Aid to resolve litigation claims in an "equitable manner", the company said.
Apart from the opioid lawsuits, the pharmacy chain has been struggling with total debts of $8.60 billion as of June 3, according to a court filing with the U.S. Bankruptcy Court for the District of New Jersey, some of which is due to be repaid in 2025. Rite Aid also listed total assets of $7.65 billion.
Rite Aid appointed Jeffrey Stein as its new CEO and chief restructuring officer, replacing interim CEO Elizabeth Burr. Stein has been appointed to the company's board and Burr will also remain on the board, it said.
Rite Aid will close more of its underperforming stores and will transfer employees at impacted stores to other locations where possible, the company said, without providing further details.
Along with other pharmacy chains, Rite Aid has been named as a defendant in lawsuits that alleged they helped fuel the opioid crisis in the U.S.
The U.S. Department of Justice sued Rite Aid, accusing it of missing "red flags" as it illegally filled hundreds of thousands of prescriptions for controlled substances, including opioids.
The company operates more than 2,000 retail stores across 17 states in the U.S., although it is much smaller than rivals such as Walgreens Boots Alliance and CVS Health.
The Chapter 11 filing makes Rite Aid one of several companies that have filed for bankruptcy as they face lawsuits over the opioid crisis in the U.S.
Mallinckrodt, which is also facing litigation over its marketing of generic opioids, filed for its second bankruptcy in August and is in talks with major investors about selling some or all of its business units.
Rite Aid entered an agreement with MedImpact Healthcare Systems for the acquisition of its Elixir Solutions business. MedImpact will serve as the 'stalking horse bidder' in a court-supervised sale process.
(Reporting by Abinaya Vijayaraghavan, Mariam Sunny and Sriparna Roy in Bengaluru; Editing by Shweta Agarwal, Pooja Desai, Rashmi Aich and Simon Cameron-Moore)