Rite Aid reaches bankruptcy settlement with lenders, DOJ, McKesson (updated)

Rite Aid

26/03/2024 16:47

(Adds detail on creditor negotiations in par 4-5)
    By Dietrich Knauth
       NEW YORK, March 26 (Reuters) - Pharmacy chain Rite Aid
 RADCQ.PK  has reached a settlement with its lenders, the U.S.
Department of Justice, and drug supplier McKesson Corp  MCK.N ,
clearing a path for Rite Aid to complete its bankruptcy case by
late April, a company lawyer said Tuesday.
    "We have reached an agreement on all key points with all key
economic stakeholders," Rite Aid attorney Aparna Yenamandra said
at a bankruptcy court hearing in Trenton, New Jersey. Yenamandra
did not provide details about the settlement, saying that some
issues needed to be worked out before it can be presented in
court. 
    The deal is not opposed by creditors who have sued Rite Aid
over its sale of opioid medications, Yenamandra said. Before it
filed for bankruptcy, Rite Aid faced over 1,600 lawsuits
alleging that pharmacy chain ignored red flags and illegally
filled prescriptions for addictive opioid medication.
        Rite Aid's junior bondholders raised a note of caution
during the hearing, saying that the remaining issues to be
worked out are more than just a "technicality."  
    "This is going to take some real work," said Andrew
Rosenberg, an attorney for bondholders, including Brigade
Capital Management, HG Vora Capital Management, and J.P. Morgan
Investment Management.
    Rite Aid's lawyers said they will work to resolve concerns
with the deal by Thursday. 
    "The time has come to reach a resolution, and that is
exactly what everyone is going to do in the next 48 hours," Rite
Aid attorney Joshua Sussberg said at the hearing. 
    Rite Aid will return to court on Thursday, when it will ask
U.S. Bankruptcy Judge Michael Kaplan to allow the company to
begin gathering votes for its bankruptcy plan. Kaplan said he is
"very much intrigued" to hear more details about the settlement
at the upcoming court hearing. 
    If Rite Aid can begin the voting process this week, it
should be able to get final court approval of its bankruptcy
restructuring by April 22, Yenamandra said. 
        Rite Aid filed for bankruptcy in October, seeking to
address its high debt, shut down underperforming retail
locations, and sell off non-core business units. Rite Aid
received bankruptcy court approval to sell its pharmacy benefit
company, Elixir, in January.

    

 (Reporting by Dietrich Knauth, Editing by Nick Zieminski, Chizu
Nomiyama and Aurora Ellis)
 ((Dietrich.Knauth@thomsonreuters.com;))