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Business News/ News / Rite Aid Delays Key Hearing on Bankruptcy Exit, Deal to Cut Debt
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Rite Aid Delays Key Hearing on Bankruptcy Exit, Deal to Cut Debt

Drug store chain Rite Aid Corp. put off a key court hearing in order to complete a deal that would cut $2 billion in debt, resolve lawsuits related to opioid prescriptions and end the company’s six-month-old bankruptcy.

Rite Aid Delays Key Hearing on Bankruptcy Exit, Deal to Cut DebtPremium
Rite Aid Delays Key Hearing on Bankruptcy Exit, Deal to Cut Debt

(Bloomberg) -- Drug store chain Rite Aid Corp. put off a key court hearing in order to complete a deal that would cut $2 billion in debt, resolve lawsuits related to opioid prescriptions and end the company’s six-month-old bankruptcy.

The company needs more time to put a series of agreements into writing, company bankruptcy attorney Aparna Yenamandra said during a brief court hearing Thursday. Rite Aid had been scheduled to ask a federal judge next week to approve its reorganization plan, which is built on a series of deals the company is now trying to complete.

US Bankruptcy Judge Michael B. Kaplan instead will schedule a status conference on the company’s progress. No new date for a hearing on the reorganization plan was set.

“We need a little bit more time," to find a way to make the legal documents reflect the deals the company has struck with bondholders and other creditor groups, Yenamandra told Kaplan.

The deal calls for noteholders to take over the struggling pharmacy chain and exit bankruptcy protection as a going concern, according to court documents. If the company gets an offer to buy the chain that is worth more than the current deal, it would likely change its plan, Rite Aid has said in court documents.  

Last month, Yenamandra told Kaplan that the company reached an agreement “on all key economic points" with its primary financial stakeholders, including its banks, junior bondholders, the US Justice Department, McKesson Corp. and committees representing unsecured creditors, opioid victims and others with tort claims.

The company has sought to resolve major barriers to its exit from Chapter 11 protection. It has been closing unprofitable stores in bankruptcy and already sold its pharmacy benefits manager unit, Elixir, to MedImpact Healthcare Systems.

Previously: Rite Aid Hires Liquidators as Talks With Possible Buyers Drag On

The case is Rite Aid Corp., 23-18993, US Bankruptcy Court for the District of New Jersey.

More stories like this are available on bloomberg.com

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Published: 18 Apr 2024, 11:23 PM IST
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