Amid its bankruptcy proceedings, the struggling pharmacy chain Rite Aid has engaged liquidators upon its creditors’ demands, even as it remains in discussions with potential acquirers, according to a source involved in the company’s recovery efforts.
The company has contracted two liquidation firms, Hilco Merchant Resources and SB360 Capital Partners, to manage the closure sales of any stores slated for shutdown. This move was authorized by US Bankruptcy Judge Michael Kaplan in a video conference court session in January. Since declaring bankruptcy in October, Rite Aid has been phasing out unprofitable locations while searching for purchasers for the stores it intends to maintain. The company has terminated approximately 500 leases under bankruptcy protection, as disclosed by Rite Aid’s attorney Warren Usatine during a court appearance on January 29. At the onset of its restructuring, Rite Aid operated over 2,100 stores, court filings indicate.
The decision to hire liquidators primarily aims to fulfill the requirements of the lenders funding Rite Aid’s bankruptcy proceedings, shared a knowledgeable individual who preferred to stay anonymous when discussing non-public information.
Rite Aid has not commented on the engagement of the liquidation services. In a recent development, the company finalized the sale of its insurance business, Elixir, to MedImpact Healthcare Systems for $575 million, following the absence of superior offers, as per court documents.
This sale is a component of Rite Aid’s pre-bankruptcy strategy focusing on rejuvenating its retail operations. The auction for the retail segment has seen delays on four occasions, court records reveal.
Rite Aid is also engaged in court-ordered mediation with junior creditors, some of whom hold the company accountable for contributing to the opioid crisis in the United States. Supported by its senior lenders, Rite Aid aims to negotiate with unsecured creditors to resolve its bankruptcy case.
Should the efforts to find a buyer to sustain a portion of the business falter, senior lenders might assume control of Rite Aid following the divestiture of its unprofitable stores, as per court documentation. Absent a sale or an agreement with senior lenders, the company might face complete liquidation.
I sent email to Rite-Aid earlier today to inquire about the fate of the Rio Linda store, but have not yet received a reply.
