Rite Aid Emerges from Bankruptcy as Private Company

Pasadena Rite Aid stores, along with the rest of the company, successfully exited bankruptcy this week as a privately held company owned by creditors. 

The restructuring, completed after months of financial and legal challenges, has resulted in a streamlined operation and significantly reduced debt.

As of early September, there were three Rite Aid stores operating in Pasadena, at 1038 E. Colorado Boulevard, 1421 E. Washington Boulevard, and 3745 E. Foothill Boulevard.

The company, which filed for Chapter 11 protection in October 2023 amid struggling sales and opioid-related lawsuits, has since closed more than 520 of its pharmacies. 

This represents about a quarter of its 2,111 stores at the time of the filing. Rite Aid had initially planned to shut down 154 stores but ended up closing many more during the restructuring process.

As part of the reorganization, Rite Aid has eliminated $2 billion in debt and secured $2.5 billion in exit financing to support its operations, according to a news release. The company now operates with a “rightsized store footprint” and a more efficient business model.

Matt Schroeder, the company’s Chief Financial Officer, has been appointed CEO, succeeding Jeffrey Stein, who served as CEO and Chief Restructuring Officer during the bankruptcy. Schroeder, who joined Rite Aid in 2000 as vice president of financial accounting, will lead the company into its next phase.

The bankruptcy filing followed a lawsuit from the Justice Department in March 2023, accusing Rite Aid of violating the False Claims Act and the Controlled Substances Act. The complaint alleged that the company filled unlawful prescriptions for drugs such as oxycodone, fentanyl, and benzodiazepine while ignoring internal warnings.

The restructuring aimed to address these legal claims while reducing the company’s debt and stabilizing its financial situation.