Rite Aid is preparing to file for Chapter 11 bankruptcy to restructure its debts, including opioid liabilities, according to people familiar with the matter.
Advisers to the Philadelphia, Pennsylvania-based pharmacy chain have entered confidential discussions to work out a plan ahead of the filing, people familiar with the matter said. They asked not to be identified because the discussions are private. The company is still finalizing its plans, which could change, the people added. Rite Aid is one of the largest pharmacy chains in the United States, with more than 2,200 locations.
The pharmacy chain has been struggling with debt. In March, the Department of Justice debate Rite Aid knowingly filled hundreds of thousands of illegal prescriptions. The federal intervention came after three whistleblowers who used to work for Rite Aid pharmacies sued the company in 2019.
Representatives for Rite Aid and company adviser Guggenheim Securities declined to comment. Representatives for corporate advisers Kirkland & Ellis and Alvarez & Marsal did not respond to requests for comment. The Wall Street Journal reported earlier that the company was preparing to file for bankruptcy in the coming weeks.
Rite Aid has more than $3 billion in long-term borrowing. Its 7.5 percent first-lien notes due 2025 were trading at 59.5 cents, according to Trace. The company’s shares plummeted more than 50% to as low as 66 cents on Friday.