One of the largest U.S. drugstore chains, Rite Aid, will close about 500 stores across the country while it negotiates a plan to file for bankruptcy.
The Wall Street Journal reported that the company, which is the third largest in the country, wants to close branches and sell their remaining businesses or have creditors take over.
The outlet reported that a group of bondholders would prefer to liquidate a large number of their stores, with the two sides in discussions about how many stores to close.
The Journal previously reported that Rite Aid is considering a bankruptcy filing and faces debts of more than $3.3 billion.
In addition to the debt problem, the chain is also facing federal lawsuits alleging the company is oversupplying opioids, including fentanyl.
Pedestrians pass a Rite Aid store in Oakland, California, USA on April 1, 2015
A Chapter 11 filing would allow the company to keep the business alive by reorganizing and paying creditors over time.
The chain, headquartered in Philadelphia, has also closed several area stores in recent months.
Wendell Young, president of Local 1776, a union representing Rite-Aid employees, said 6ABC: ‘People will have to go further for their pharmacies where the company does not have the resources to properly staff them.
“They’ll find longer lines, probably a challenge to get everything on time.
‘They are mainly women. Hardworking women who took these jobs part-time while raising a family and who actually run these stores.”
A Chapter 11 filing would cover Rite Aid’s debts and pending legal charges, sources told the Journal, and close about a quarter of its 2,100 locations.
Rite Aid predicts it will generate “approximately $650 million to $680 million” in losses next year.
The company reported this in a statement NBC News that it “continues to work constructively with our financial stakeholders to identify the best path forward to reduce our debt and position the company for continued success.”
The company is facing a significant number of cases in state courts alleging it contributed to the opioid epidemic.
In March, the Justice Department announced that it had filed a whistleblower lawsuit against Rite Aid.
The Department of Justice alleges that Rite Aid knowingly filled illegal prescriptions for controlled substances.
At the time, Attorney General Merrick B. Garland said, “The Department of Justice is using every tool at our disposal to confront the opioid epidemic that is killing Americans and devastating communities across the country.
Wendell Young, president of Local 1776, a union representing Rite-Aid workers, said most of the people affected would be primarily women
Attorney General Merrick B Garland participates in a press conference in Stockholm, Sweden, June 21, 2023
“That includes holding companies, like Rite Aid, responsible for knowingly filling unlawful prescriptions for controlled substances.”
Assistant Attorney General Vanita Gupta added, “According to our complaint, Rite Aid’s pharmacists repeatedly filled prescriptions for controlled substances with obvious red flags, and Rite Aid intentionally deleted internal notes about suspected prescribers.
“These practices have opened the floodgates to millions of opioid pills and other controlled substances illegally flowing out of Rite Aid stores.”
The complaint alleges that Rite Aid knowingly filled hundreds of thousands of unlawful prescriptions over the course of five years.
According to the government, these prescriptions also include prescriptions for opioids, including oxycodone and fentanyl.
Rite Aid asked a court to dismiss the department’s lawsuit, denying allegations that it provided illegal prescriptions for controlled substances.
A bankruptcy filing would put these lawsuits on hold and open a path for Rite Aid to resolve them in one forum, the Journal said.
DailyMail.com has reached out to Rite Aid for comment.
In addition to Rite Aid, CVS is about to close hundreds of stores across the country as it undergoes a complete retail overhaul.
The major drugstore chain is nearing the end of a policy launched in 2021 that will see 300 stores closed each year – meaning 900 will be closed by 2024.