Rite Aid, one of the nation’s largest pharmacy chains, announced on Sunday night that it has filed for Chapter 11 bankruptcy protection.
The Philadelphia-based company said in its filing that the decision comes as a move to address and resolve litigation claims, following a lawsuit by the federal government. The government’s lawsuit stems from allegations against Rite Aid for playing a role in the opioid crisis, claiming the chain filled “hundreds of thousands” of prescriptions that failed to comply with legal requirements.
The bankruptcy filing will lead to a substantial reduction in Rite Aid’s retail presence and save on those costs. The chain plans to terminate leases of its underperforming stores.
A report from The Wall Street Journal stated that Rite Aid intends to shutter between 400 to 500 of its existing 2,200 stores.
In a statement, Rite Aid said it will “continue assessing its footprint and close additional underperforming stores.”
Rite Aid continues to operate a nearby store along Cold Springs Creamery Road in Buckingham Township.
Rite Aid mentioned in the press release that it has managed to secure $3.45 billion in new financing. The financial cushion is anticipated to support its operations as it navigates through the Chapter 11 process.
“Rite Aid has served customers and communities across our country for more than 60 years, and the important actions we are taking today will enable us to move ahead as a stronger company,” CEO Jeffrey Stein said.
Stein was appointed CEO over the weekend and the leader of the company’s restructuring effort.
Rite Aid has been grappling with financial difficulties over the past few years. The broader retail pharmacy sector, too, hasn’t been immune to challenges, with numerous stores facing closures and an alarming rise in theft incidents, according to CNN.