(Bloomberg) -- Bankrupt pharmacy chain Rite Aid Corp. has until March 1 to complete its turnaround under a timeline approved by a federal judge on Tuesday.
US Bankruptcy Judge Michael Kaplan scheduled a final hearing that day to decide the fate of the company’s reorganization proposal. The ruling comes after complaints that the case was moving so fast it threatened to harm lower-ranking creditors, including people who claim Rite Aid wrongly sold addictive pain killers.
The company, backed by senior lenders, had urged Kaplan to hold the hearing in February, arguing that the longer Rite Aid stays in bankruptcy, the more likely it is to liquidate instead of finding a buyer willing to rescue the retailer.
Rite Aid faced pressure from its two official creditor committees to slow the pace of the reorganization. A panel of lower-ranking, unsecured creditors and a group representing opioid victims argued that they need more time to review the $3.45 billion loan package Rite Aid says it needs to help fund its reorganization.
The company has filed a proposal built on the assumption Rite Aid will have a successful pair of auctions set for December. The heart of the proposal can’t be finished until after the sale is locked down.
During a court hearing held by video Tuesday, Rite Aid lawyers said they are hoping to attract multiple offers for the entire company. Currently, it has agreed to sell its valuable pharmacy benefits manager to MedImpact Healthcare Systems for $575 million, unless a higher bid comes in.
Last week, Rite Aid said MedImpact was having “financing issues.” To help keep the deal alive, Rite Aid has agreed to help finance the purchase. The move is unusual for a corporate bankruptcy auction; bidders typically must prove they can afford to buy whatever is up for sale before being allowed to participate.
The case is Rite Aid Corp., 23-18993, US Bankruptcy Court for the District of New Jersey.
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