Rite Aid Files for Chapter 11 Bankruptcy Again

Categories: California Business NewsCalifornia News

A Rite Aid store prepares for closure amid bankruptcy proceedings.

News Summary

Rite Aid has filed for Chapter 11 bankruptcy for the second time in two years, planning to close numerous stores and auction off properties in 15 states. The company, which operates approximately 1,240 stores, will initially close 47 locations across nine states. This move reflects ongoing financial struggles in a competitive retail environment, urging customers to transfer prescriptions to alternative pharmacies. Liquidation sales are already underway, with significant changes expected as Rite Aid navigates its bankruptcy proceedings.

New York – Rite Aid has filed for Chapter 11 bankruptcy for the second time in the last two years, revealing plans to close numerous stores and auction off properties across 15 states. The company, which operates roughly 1,240 stores, is expected to list nearly all of its locations for sale pending court approval as it seeks to stabilize its finances.

As part of this bankruptcy process, Rite Aid has identified 47 locations across nine states that will close initially, with the closures impacting customers in California, Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, and Washington. In New York alone, the company plans to shut down all of its 178 stores, including 11 in the Capital Region. The first wave of store closures will begin on June 4, 2025, as employees receive layoff notifications.

Closure notices sent to customers indicate that stores will cease honoring gift cards, returns, and exchanges starting June 5, 2025. Additionally, Rite Aid stores will no longer issue reward points for customers, and any accumulated points will expire according to the usual terms. The company is also making plans to sell its prescription files to competing pharmacies, although there is no assurance that these files will be transferred to nearby locations.

A&G Real Estate Partners will oversee the sale of Rite Aid’s real estate, with rolling bid deadlines and auctions set to begin in May 2025. Liquidation sales are already underway at several locations, and many stores are expected to close in the months leading up to this timeline.

CEO Matthew Schroeder stated that attempts to secure new capital to support operations have not succeeded, leading to the difficult decision regarding layoffs and store closures. Rite Aid has faced significant financial challenges in recent years, with losses attributed to stiff competition from major retailers such as Walmart, CVS, and Walgreens.

This latest bankruptcy filing follows the company’s previous Chapter 11 filing in 2023, which resulted in the closure of many stores. The intense retail environment and its related challenges have greatly impacted Rite Aid’s viability as a pharmacy chain. The company was founded in Scranton, Pennsylvania, in 1962 and, at its peak, operated over 5,000 locations across the country.

In light of the impending changes, customers are strongly advised to transfer their prescriptions to alternative pharmacies as Rite Aid restructured its operations to maximize value for creditors amid ongoing struggles rooted in the opioid crisis and declining sales. With the planned closures and asset sales, Rite Aid will have to navigate a problematic retail landscape that has starkly altered the pharmacy market.

As the situation evolves, both employees and customers will feel the effects of these major changes as Rite Aid deals with the fallout from its bankruptcy proceedings and attempts to reshape its business model in a challenging economic climate.