(NationRise.com) – Rite Aid, one of the nation’s largest retailers of pharmaceuticals, filed for Chapter 11 bankruptcy recently amid massive debt and corporate restructuring.
The restructuring, which Rite Aid’s creditors have already approved, will include closing its least profitable locations and new considerations of its place in the industry. Part of that restructuring includes $3.45 billion of funding that will be used to finance future initiatives.
The bankruptcy, which was filed in New Jersey, does not include Elixir Insurance, a benefits firm that Rite Aid bought in 2015. Instead, it hopes to sell off Elixir Insurance.
The motion follows a slew of lawsuits against Rite Aid over allegations that illegal prescriptions for painkillers have driven the opioid epidemic. Several other companies have also declared bankruptcy after patients, municipalities, and state governments have accused them of failing to properly and responsibly fulfill opioid prescriptions.
The CDC reports that opioid deaths have hit record numbers in recent years — and continue to climb.
Purdue Pharma, the pharmaceutical company that developed OxyContin during the 90s, also declared bankruptcy a few years ago. The drug maker is often blamed for starting the opioid crisis with its flagship painkiller.
The lawsuits against Rite Aid have also harmed the company’s reputation. The retailer has seen a sharp decline in sales as it faces mounting debt and legal issues. Revenue fell by half a billion dollars on June 3, the end of its fiscal quarter. Investors were told to expect a loss as high as $680 million by 2024. The company has also faced losses from declining Elixir Insurance memberships.
Rite Aid announced the appointment of Jeffrey Stein Sunday as its new CEO and restructuring officer. He will replace interim CEO Elizabeth Burr. She will maintain a position on the board. Bruce Bodaken, the chairman of Rite Aid, said he is confident in Stein’s contributions and hopes his appointment will ease tensions among investors.
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