Rite Aid reaches bankruptcy settlement with lenders, DOJ, McKesson
Reuters
Published Mar 26, 2024 10:52AM ET
Updated Mar 26, 2024 12:54PM ET
By Dietrich Knauth
NEW YORK (Reuters) -Pharmacy chain Rite Aid (NYSE:US90274J5618=UBSS) has reached a settlement with its lenders, the U.S. Department of Justice, and drug supplier McKesson Corp (NYSE:MCK), clearing a path for Rite Aid to complete its bankruptcy case by late April, a company lawyer said Tuesday.
"We have reached an agreement on all key points with all key economic stakeholders," Rite Aid attorney Aparna Yenamandra said at a bankruptcy court hearing in Trenton, New Jersey. Yenamandra did not provide details about the settlement, saying that some issues needed to be worked out before it can be presented in court.
The deal is not opposed by creditors who have sued Rite Aid over its sale of opioid medications, Yenamandra said. Before it filed for bankruptcy, Rite Aid faced over 1,600 lawsuits alleging that pharmacy chain ignored red flags and illegally filled prescriptions for addictive opioid medication.
Rite Aid's junior bondholders raised a note of caution during the hearing, saying that the remaining issues to be worked out are more than just a "technicality."
"This is going to take some real work," said Andrew Rosenberg, an attorney for bondholders, including Brigade Capital Management, HG Vora Capital Management, and J.P. Morgan Investment Management.
Rite Aid's lawyers said they will work to resolve concerns with the deal by Thursday.
"The time has come to reach a resolution, and that is exactly what everyone is going to do in the next 48 hours," Rite Aid attorney Joshua Sussberg said at the hearing.
Rite Aid will return to court on Thursday, when it will ask U.S. Bankruptcy Judge Michael Kaplan to allow the company to begin gathering votes for its bankruptcy plan. Kaplan said he is "very much intrigued" to hear more details about the settlement at the upcoming court hearing.
If Rite Aid can begin the voting process this week, it should be able to get final court approval of its bankruptcy restructuring by April 22, Yenamandra said.
Rite Aid filed for bankruptcy in October, seeking to address its high debt, shut down underperforming retail locations, and sell off non-core business units. Rite Aid received bankruptcy court approval to sell its pharmacy benefit company, Elixir, in January.
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Written By: Reuters
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