Report: Rite Aid's 2nd bankruptcy is imminent amid reports of more store closures and layoffs
Less than a year after Rite Aid finally wrapped up its first bankruptcy proceedings, it's now reportedly planning to file for Chapter 11 protection a second time.
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Based on a new report from Bloomberg, Rite Aid employees received a letter today from CEO Matthew Schroeder stating that the company's negotiations with lenders for more capital have failed. He went on to explain that the pharmacy chain can no longer sustain itself and intends to file for Chapter 11 bankruptcy.
Per the letter, the company will start by cutting jobs at its corporate offices in Pennsylvania, a move Schroeder attributed to 'the dramatic downturn in the economy.' An apparent copy of the letter is now making its rounds on Reddit, though Rite Aid has not publicly verified its accuracy.
As of this writing, Rite Aid has not officially confirmed a second bankruptcy filing or publicly acknowledged the alleged impending job cuts. Fast Company has reached out to the pharmacy chain for more information on the report and will update this story accordingly.
Bitter pills
Over the past several years, Rite Aid has struggled with the Sisyphean task of recovering from an initial bankruptcy—but now, it seems that its restructuring efforts have fallen short.
Rite Aid first filed for Chapter 11 back in 2023, a move that was intended to help the company reduce its debt. As part of the process, the chain received a financing commitment of $3.45 billion from lenders.
In the following months, Rite Aid closed hundreds of stores across the U.S. to reduce costs and turn its finances around.
As Fast Company reported in April, Rite Aid store closures have continued this year, with local media in New Jersey, California, and Oregon reporting on such closings recently.
Emerging from bankruptcy a year ago
Last June, Rite Aid asked for court approval of its restructuring plan, which was ultimately granted, allowing the company to emerge from the bankruptcy proceedings in September. At the time, the company reported that it had eliminated $2 billion of total debt and received $2.5 billion in exit financing.
Now, though, it looks like that wasn't enough to get the company back on track. According to several previous reports from Bloomberg, the writing has been on the wall for this second Chapter 11 filing for several weeks.
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