by Dietrich Knoth
NEW YORK: A US bankruptcy judge on Friday Rite Aidrestructuring plan allows pharmacy chain to take its cut loan Paid off up to $2 billion in debt and handed control to a group of lenders.
US bankruptcy judge Michael Kaplan approves Rite Aid Bankruptcy plan on one court During a hearing in Trenton, New Jersey, he said the restructuring had saved the company from closure and ceasing operations.
Before Kaplan’s ruling, Rite Aid attorney Aparna Yenamandra told the judge that 28,000 jobs could be lost if the restructuring deal is not approved.
“If we can’t do this now, we’ll never be able to do it,” Yenamandra said.
Rite Aid filed for Chapter 11 in October 2023 after reporting a $750 million loss and $24 billion in revenue last fiscal year.
Rite Aid used its bankruptcy to close hundreds of stores, sell its pharmacy benefits company Elixir, and reach settlements with its lenders, drug distribution partner McKesson, and other creditors.
Rite Aid’s restructuring will provide $47.5 million to junior creditors, including individuals and local governments that have sued the company for allegedly contributing to the deadly U.S. attack. The opioid epidemicBefore filing for bankruptcy, Rite Aid faced 1,600 opioid lawsuits, including one brought by the federal government alleging the company ignored red flags when filling questionable prescriptions for addictive opioid pain medications.
Eric Preiss, an attorney representing opioid creditors, said 22,000 individuals had filed personal injury opioid claims. Rite Aid bankruptcy Each was expected to receive payments between $250 and $500. Preece said while the settlement is modest, it is a win for opioid claimants because of Rite Aid’s massive debt and severe financial troubles.
“It’s terrible, but it could have been worse,” Preece said. “That’s the truth of the matter.”
Rite Aid reached settlements with 16 of the 17 states in which it operates, resolving opioid claims in those states. Kaplan overruled Maryland’s objection, arguing that the state could not prevent Rite Aid’s bankruptcy so it could continue investigating Rite Aid’s opioid sales.
Rite Aid, which had more than 2,000 stores when it filed for bankruptcy in October, will emerge from bankruptcy with about 1,300 stores remaining.
The company plans to exit bankruptcy in about a month, which will be financed by $2.55 billion in financing provided by its lenders, Yenamandra said.
Rite Aid will use the time to fine-tune some of the details of its bankruptcy deal, including a last-minute change made by the U.S. Supreme Court on Thursday.
Verdict in Purdue Pharma bankruptcy case
Which sharply reduced the ability of bankruptcy courts to stop lawsuits against people and organizations that had not filed for bankruptcy.
To comply with that decision, Rite Aid will work to ensure that its own deal is successful.
legal protection
Non-debtors, such as Rite Aid’s lenders and the CEO, will need the consent of everyone who has a legal claim against those parties.
(Reporting by Dietrich Noth; Editing by Chris Reese, Leslie Adler, Alexia Garamfalvi and Diane Craft)
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