US corporate bankruptcy has reached its highest level since the Great Recession
In the first three months of 2025, the number of companies filing for bankruptcy in the United States since 2010 was the highest.
Straight Arrow News
Pharmacy Chain Rite Aid has launched Chapter 11 bankruptcy proceedings, the company announced on Monday, May 5th.
Rite Aid CEO Matt Schroeder pointed to financial challenges “enhanced by the rapidly evolving retail and medical landscape” to file it with the US Bankruptcy Court in the area of New Jersey.
The company, which operates 1,240 stores in 15 states, said it is now able to access pharmacy services and is “working to promote smooth relocation of customer prescriptions to other pharmacies.”
“As we move forward, our key priority is to ensure uninterrupted pharmacy services for our customers and maintain work for as many peers as possible,” Schroeder said.
Work will be reduced if stores remain open
The company announced it has acquired $1.94 billion in new funding to continue operating the store during bankruptcy proceedings and potential sales.
Earlier on Monday, Bloomberg News reported that the company would cut jobs after failing to secure additional funds from lenders, citing an internal letter from Schroeder, but employees will continue to receive payments.
Schroeder said the company is “inves meaningful interest from many potential national and regional strategic acquirers.”
Second bankruptcy for ritual assistance
Rite Aid filed for Chapter 11 protection in October 2023 after reporting a loss of $750 million for the previous fiscal year.
The company used its previous bankruptcy to cut its $2 billion in debt, close hundreds of stores, sell pharmacy benefits company Elixir, and negotiated settlements with lenders, drug distribution partner McKesson, and other creditors.
Previous bankruptcies have also resolved hundreds of lawsuits claiming ritual aid ignored the red flag in filling suspicious prescriptions for addictive opioid pain medications.
But despite these settlements, Rite Aid still had $2.5 billion in debt when it was born from bankruptcy as a lender-owned private company in 2024.
Pharmacy chains such as Rite Aid, rivals such as Walgreens and CVS are under pressure as lower drug margins and competition between Walmart and Amazon has led to hundreds of stores shutdowns.
Store closures exacerbate concerns about the emergence of the “pharmacy desert,” according to US lawmakers and trade groups, including the National Association of Community Pharmacists.
Contribution: Reuters