Rite Aid bankruptcy: What to know about store closings, prescription transfers, layoffs, gift cards, and more
Beleaguered pharmacy chain Rite Aid has officially filed for Chapter 11 bankruptcy protection after weeks of media reports suggesting that it was on the cusp of doing so.
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The bankruptcy is Rite Aid's second in two years, and it leaves a lot of questions for both customers and employees, including whether stores will be closing, if there will be layoffs, and what happens to customers' prescriptions.
Here's what you need to know about Rite Aid's second bankruptcy.
Why did Rite Aid file bankruptcy the first time?
Rite Aid originally filed for bankruptcy in 2023. It emerged from the process less than a year ago, in 2024, with the hopes of being in a better financial position and on more resilient footing. But with its second bankruptcy filing yesterday, those hopes seem to have been dashed.
To understand why Rite Aid is once again filing for bankruptcy, it helps to understand why the company originally filed for bankruptcy in 2023—something Rite Aid has laid out in detail in documents it filed with the United States Bankruptcy Court in the District of New Jersey today.
Rite Aid cited multiple factors that necessitated its 2023 bankruptcy filing, including:
'suboptimal lease portfolio' of underperforming stores
elevated labor costs
increased costs from 'shrink' (theft)
lower credit limits
more restrictive payment terms from vendors
reduced demand for its non-medication 'front end' products
'The lack of such inventory,' Rite Aid said, 'gave rise to a vicious cycle: high-margin front-end sales declined due to insufficient inventory, and lagging sales depleted liquidity and caused vendors to tighten trade terms even further.'
The company's 2023 bankruptcy was meant to help the struggling pharmacy chain address the financial issues caused by these problems. But that's not the way things have played out since, which has led to the company filing its second bankruptcy this week.
Why is Rite Aid filing for bankruptcy again?
In a court document, Rite Aid said that its 'post-emergence business plan was based on data-driven projections (and extensive discussions with vendors) that Rite Aid's front-end vendors would return to their less restrictive prepetition payment terms' as well as assurances from select capital providers that the company would be provided with the needed letter of credit facilities—all of which the company said 'was crucial to Rite Aid's recovery.'
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