Rite Aid Corp. declared Chapter 11 bankruptcy on Sunday, introducing new leadership as the pharmacy chain faces legal challenges over its alleged role in the opioid epidemic.
In a press release, the company announced its voluntary decision to undergo a court-monitored bankruptcy procedure, aiming to lower debt, enhance financial agility, and prioritize certain strategies. These strategies include potentially selling Elixir Solutions, quickly deciding the future of several stores, and addressing legal issues fairly.
Furthermore, Rite Aid has secured a financial backing of $3.45 billion from creditors, believed to ensure adequate funds throughout the bankruptcy proceedings.
"Rite Aid is continuing to deliver leading healthcare products and services across its retail and online platforms for the nearly one million customers it serves daily," the release said. "The Company remains committed to improving health outcomes and delivering on its purpose to help people achieve whole health for life."
According to a document submitted to the U.S. Bankruptcy Court in the District of New Jersey, Rite Aid estimates its assets and liabilities to be between $1 billion and $10 billion, as reported by Reuters.
Rite Aid also revealed the immediate appointment of Jeffrey Stein as the CEO, Chief Restructuring Officer, and a board member. Stein takes over from Elizabeth Burr, who had been the interim CEO since January and will now join the company's board of directors.
"As CEO, CRO, and a member of the Board of Directors, my priorities will include overseeing the actions now underway to strengthen the Company’s financial position and further advance its journey to reach its full potential as a modern neighborhood pharmacy. I have tremendous confidence in this business and the turnaround strategy that has been developed in recent months," Stein said.
Rite Aid has promptly added Carrie Teffner and Paul Keglevic to its board of directors. Both bring years of expertise in spearheading transformation projects and driving operational enhancements and turnarounds.
The pharmacy chain's move to declare bankruptcy and overhaul its leadership follows several challenging years marked by falling sales and legal complications.
Recently, in March, the Department of Justice (DOJ) sued Rite Aid, alleging the company intentionally played a role in the opioid epidemic. Other pharmacies like CVS, Walgreens, and Walmart have faced analogous legal challenges.
The DOJ's lawsuit claims that Rite Aid violated the False Claims Act and the Controlled Substances Act by deliberately processing illegitimate drug prescriptions.
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