By Sabrina Valle and Dietrich Knauth
(Reuters) -Bankrupt Rite Aid on Wednesday received court approval to close stores and sell most of its pharmacy assets in separate transactions to CVS, Walgreens, Albertsons, Kroger and Giant Eagle, among others.
The U.S. pharmacy chain, which operates about 1,200 stores and has some 8 million customers, filed for bankruptcy earlier this month for the second time in two years. Its retail business was performing poorly due to decreased drug sales margins.
U.S. Bankruptcy Judge Michael Kaplan approved a fire sale for the assets Rite Aid had found buyers for in a court hearing in Trenton, New Jersey, prioritizing the transfer of prescription services for its customers over store landlords.
The sale price has not been disclosed.
Rite Aid said it will sell customer prescription files to 13 buyers, including CVS , Walgreens , Albertsons , and Kroger . Rite Aid’s attorney Alice Eaton said the quick transfer of pharmacy customers’ prescription files accomplished one of the company’s primary goals in bankruptcy.
Rite Aid has buyers for customer files at 810 of its stores, but failed to locate buyers for the files at 200 others, Eaton said. CVS is the largest buyer, and has also agreed to acquire 64 store locations in addition to taking over prescriptions for Rite Aid customers at 650 other locations.
Shmuel Klein, an attorney who represents three Rite Aid landlords, objected to the sale, saying that Rite Aid should disclose who bought what and for how much, so that landlords know how the bankruptcy will affect their lease payments.
“We still don’t know what leases were bought,” Klein said. “It’s not even half baked – it’s sort of a raw hamburger we’re getting served here.”
Judge Kaplan overruled the request, saying the public interest in ensuring the transfer of prescriptions from one pharmacy facility to another was of utmost importance.
“I think you would agree I cannot delay or defer that process to address specific landlord issues,” Kaplan said.
The Pennsylvania-based company entered bankruptcy with over $2 billion in debt, and it warned employees about likely job cuts earlier this month.
Rite Aid had 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.
(Reporting by Sabrina Valle and Dietrich Knauth; Editing by Bill Berkrot)
