Bankrupt Rite Aid pursues rapid sale of pharmacy business

By Dietrich Knauth

May 7 (Reuters) - Bankrupt U.S. pharmacy chain Rite Aid on Wednesday received court approval to pursue a rapid-fire sale of its pharmacy business, with the company aiming to reach agreements with buyers and get a sale approved in just two weeks.

U.S. Bankruptcy Judge Michael Kaplan approved Rite Aid's request for an expedited sale at a court hearing in Trenton, New Jersey, saying that Rite Aid needs to quickly line up buyers in order to ensure the seamless transfer of prescription services for its 8 million customers.

Rite Aid filed for bankruptcy on Monday for the second time in two years, after poor performance in its retail business made it difficult for the company to maintain sufficient cash flow and restock its retail inventory. The company, which has about 1,200 locations, is trying to sell its entire business in its second bankruptcy.

The Pennsylvania-based company entered bankruptcy with over $2 billion in debt, and it warned employees about likely job cuts earlier this week.

Under the sale procedures approved by Kaplan, bids for Rite Aid's pharmacy assets are due by May 13, and Rite Aid will seek final approval of one or more sales at a May 21 court hearing.

Rite Aid attorney Alice Eaton told Kaplan that the company is currently negotiating with at least 15 bidders, after reaching out to potential buyers in March.

If Rite Aid sells its pharmacy business on the proposed timeline, it would then try to sell its remaining assets in June, including its Thrifty ice cream business, its intellectual property, and remaining retail stores that are not sold as part of the pharmacy sale.

Rite Aid previously filed for Chapter 11 protection in October 2023 after reporting $750 million in losses for the previous fiscal year.

The company used its previous bankruptcy to cut $2 billion in debt, close hundreds of stores, sell its pharmacy benefit company Elixir, and negotiate settlements with its lenders, drug distribution partner McKesson and municipalities that had sued Rite Aid for allegedly filling suspicious prescriptions for addictive opioid drugs.

The case is In Re: New Rite Aid LLP, U.S. Bankruptcy Court for the District of New Jersey, No. 25-14861.

For Rite Aid: Alice Eaton and Chris Hopkins of Paul Weiss Rifkind, Wharton & Garrison; Felice Yudkin of Cole Schotz

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