May 24, 2024
Rite Aid Reassures Creditors it Will Survive Chapter 11
, Bloomberg News
(Bloomberg) -- Rite Aid Corp.’s legal team sought to reassure creditors that the bankrupt pharmacy chain will survive Chapter 11, saying the company is still working with banks and a key bondholder group on a rescue deal that has taken longer than expected to finalize.
A bondholder group slated to take the keys to the company is expected to inject new cash into the business while banks have agreed in principle to economic terms for exit financing, Rite Aid lawyer Aparna Yenamandra said Friday during a hearing in New Jersey. Advisers are working to marry the two funding sources, a process that’s “taken longer than any of us would have liked,” she said.
Other hurdles to the restructuring remain, including creditor concerns over Rite Aid Chief Executive Officer Jeffrey Stein’s compensation, Yenamandra said.
Stein, who was appointed chief executive officer the day Rite Aid filed bankruptcy, is due to be paid $20 million when the pharmacy restructures, which committees representing opioid victims and other creditors have criticized.
Last month, Rite Aid delayed a court hearing where a New Jersey bankruptcy judge was scheduled to consider approving its reorganization plan. Some company creditors have also asked Rite Aid advisers to cut their professional fees amid mounting liquidity concerns, Bloomberg reported Tuesday.
Terms for Rite Aid’s bankruptcy exit still need to be finalized, Yenamandra said, adding that there are also outstanding objections to the Chapter 11 plan that will either need to be settled by Rite Aid or adjudicated by Judge Michael Kaplan. Rite Aid is now targeting a confirmation hearing in the next 3 to 4 weeks, she said.
Chris Hopkins, a lawyer representing a key bondholder group, said his clients and the company are “marching toward a deal,” though material issues remain. Bondholders are focused on ensuring Rite Aid successfully restructures and leaves bankruptcy as a viable business, Hopkins said.
The case is Rite Aid Corp., 23-18993, US Bankruptcy Court for the District of New Jersey.
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