Rite Aid is filing for Chapter 11 bankruptcy protection and has a new CEO to lead it through the turnaround, the U.S. drugstore chain announced Oct. 15.
The Philadelphia-based company, which has 2,100 stores across the U.S., named Jeffrey Stein as its CEO, chief restructuring officer and a member of its board of directors, effective immediately. He replaces Elizabeth Burr, who has served as interim CEO since January 2023 after Heyward Donigan abruptly resigned. Ms. Burr will remain director of the Rite Aid board.
Rite Aid is reporting that it has secured $3.45 billion from lenders to fund operations throughout the bankruptcy process. The largest creditor is McKesson Corp. with trade-payable claims of approximately $667.6 million, according to Bloomberg.
Rite Aid also said it plans to close "underperforming" brick-and-mortar stores, a plan that has previously been reported, without further detail. It is working with A&G Realty Partners on its store closure and lease restructuring program.
Days before the bankruptcy announcement, the New York Stock Exchange notified Rite Aid in October that it is no longer in compliance with minimum listing requirements. NYSE has a minimum stock price of $4; Rite Aid shares were priced at 53 cents as of Oct. 5 and 65 cents Oct. 15.
It was reported in August that Rite Aid was preparing for bankruptcy. S&P Global Ratings followed that news with a downgrade to CCC- from CCC+. The company said Oct. 5 that it was reviewing strategic alternatives to recapitalize, refinance or "otherwise optimize" its capital structure.
In March, the Justice Department filed a lawsuit against Rite Aid claiming it violated the Controlled Substances Act, alleging that the company filled hundreds of thousands of prescriptions that did not meet legal requirements from May 2014 through June 2019. Rite Aid said that the bankruptcy filing will allow it to "resolve litigation claims in an equitable manner."