Major U.S. pharmacy chain Rite Aid said Sunday that it has filed for bankruptcy and obtained $3.45 billion in fresh financing as it carries out a restructuring plan while coping with falling sales and opioid-related lawsuits.
In 2022, Rite Aid settled for up to $30 million to resolve lawsuits alleging pharmacies contributed to an oversupply of prescription opioids. It said it had reached an agreement with its creditors on a financial restructuring plan to cut its debt and position itself for future growth and that the bankruptcy filing was part of that process.
The plan will “significantly reduce the company’s debt” while helping to “resolve litigation claims in an equitable manner,” Rite Aid said.
Rite Aid got caught knowingly filling illegal and suspicious opioid prescriptions, got slapped with a lawsuit, and now is restructuring.
They fueled the opioid crisis for profit, got caught, and now the courts are bailing them out of their debts
On the bright side they put my two local pharmacies out of business.
The debt isn’t even that much—the settlements are only about $30 million. The new funding they’re getting is over 100x that much.
Were they forcing pharmacists to fill suspicious scripts? I’m not putting my license on the line for that shit
“We allege that Rite Aid filled hundreds of thousands of prescriptions that did not meet legal requirements,” said Associate Attorney General Vanita Gupta. “According to our complaint, Rite Aid’s pharmacists repeatedly filled prescriptions for controlled substances with obvious red flags, and Rite Aid intentionally deleted internal notes about suspicious prescribers. These practices opened the floodgates for millions of opioid pills and other controlled substances to flow illegally out of Rite Aid’s stores.”
I won’t pretend to know a ton about finance, but I don’t like that so many large companies can get away with going bankrupt and then just “restructuring” instead of going out of business. Maybe it’s actually a good thing, I’m not sure, it definitely seems kinda scummy to me though.
Just remember: consequences to your actions are for the poor.
Chapter 11 is basically a debt consolidation plan overseen by the courts. It doesn’t wipe out debt, in fact it requires creditors to agree to the plan. It is not just for large companies, small companies use it too.
There is even a version for individuals called Chapter 13. But it’s more useful to companies than individuals, since debt consolidation usually involves selling part ownership of the company and that’s obviously not an option for individuals.
Not yet anyway.
Individuals can do this, too. You don’t even have to be rich. It’s called Chapter 11, and it isn’t just for companies. That said, it’s just a pause while you restructure your finances and requires an approved get-well plan. Individuals would have a hard time coming up with a get-well plan that doesn’t include “get a better job” or “don’t pay off this huge debt.”
If you ran a corporation, you too could benefit from this, but obviously the minority of people are in that situation, and corporations have lobbied for us to spend immense funds supporting that branch of society. They should just go bankrupt, and instead fund the people who will have lost their job, and directly invest there to get them back onto the market.
3500 million dollars to go “figure it out”. It’s meant for the company to make good by its clients, but we know that’s not what’s going to happen
I’m not sure what you mean by “that kind of socialism”, but rest assured that the $3.5b didn’t come from the government. Rite Aid got the money all by itself, mostly by selling off parts of its own business.
The courts are simply there to make sure Rite Aid doesn’t do anything sneaky with the money before paying off its creditors.
I was talking a out bailouts specifically yeah, so not in this case.
Chapter 11 is to protect against creditors and force them to cooperate, prevent lawsuits and seizing assets. IN EXCHANGE the court promises to make sure the creditors get their share in the end.
Guess how it always ends…
The question is whether it’s better overall to have Rite-aid simply cease to be and have all their assets sold off to pay their financiers only part of what is owed. It’s a fair question because if the investors don’t lose money when this happens, they are motivated to push businesses to undertake riskier behaviors.
The other option is this bankruptcy/restructuring where the creditors/financiers don’t get paid for a while to let the company get their shit together and eventually the company comes back out of bankruptcy and everything returns to normal. It’s sort of like when student loan repayments or evictions were paused.
I’m firmly of the belief that any company that is “too big to fail” absolutely must be broken up as a matter of national economic security. But restructuring of debts to allow a company to continue to do business and to allow investors to recoup more of their investment isn’t a new thing and is arguably overall good for people - if every single Rite-aid disappeared overnight, that would really disrupt a lot of peoples’ lives.
Another thing to consider is that one of the reasons they are in financial trouble is that they got sued. Well if they just went under, then the folks who are supposed to be made whole by those lawsuits might collect nothing at all (I know it’s complicated, but I don’t know how the assets are legally divided up in a liquidation - I’m sure judgments are high priority).
So overall, while this is certainly questionable and debatable, in the grand scheme of things much, much worse stuff happens that needs to be fixed before we get around to worrying overmuch about this - in my opinion.
The airlines (and many other industries) have used it against organized labor.
It’s just code for it’s hard for them to pay their debts so they want to Welch on some of the ones they don’t want to pay. (Like pesky lawsuits for fueling the opioid epidemic).
TIL Rite Aid still exists
Walgreens attempted to buy Rite Aid for about $9.4 billion in a deal announced in 2015. But the larger drugstore chain scaled back its ambition a couple years later and bought only a chunk of Rite Aid, around 1,900 stores, to get the deal past antitrust regulators.
