Manhattan Spared As Rite Aid Files For Bankruptcy, But 20 Stores Close across NYS

Saddled by debt and litigation fees, Rite Aid Corp. is seeking Chapter 11 protection. The drugstore chain will be closing 154 of its over 2,000 locations nationwide including three outer borough outlets in the city, but the five outlets in Manhattan will be spared.

| 19 Oct 2023 | 10:23

Rite Aid Corp., at one time one of the biggest drug store chains in the city, sought Chapter 11 protection and said it is planning to shutter 154 of its over 2,000 stores nationwide. The five outlets that the drug store giant operates in Manhattan–in the East Village, Greenwich Village, Midtown East, Harlem, and Washington Heights–are not among the outlets being shuttered.

Three of the closures will be in the outer boroughs: two in Brooklyn and one in Queens, according to the Oct. 15 chapter 11 filing in federal court in New Jersey. Across New York State, there will be 20 closures, the filing reviewed by Straus News shows.

Court filings show that the drugstore chain has accrued over $8.5 billion in debt–close to $1 billion more than its total assets. The company reported $749.9 million in net losses for the 2023 fiscal year, which was its sixth successive fiscal year operating at a loss. It owes close to $1.1 billion to its top five unsecured creditors: McKesson Corp., U.S. Bank Trust National Association, Humana Health Plan Inc., Loyd F. Schmuckley, Jr., and Seqirus USA Inc.

Rite Aid’s financial troubles have also been attributed to litigation costs related to its role in the opioid crisis. The company is currently facing over a thousand lawsuits, according to a Forbes report. In March, the Justice Department filed a complaint against the company, alleging that Rite Aid had enabled its pharmacists to fill illegitimate prescriptions for opioids and other controlled substances, reaping the profits while fueling the nationwide epidemic..

Rite Aid is the nation’s seventh largest pharmacy, according to the Drug Channels Institute. Its competitors have a stronger foothold in Manhattan: Walgreens and its New York pharmacy chain Duane Reade have 99 locations in Manhattan; CVS has 66. But neither have been exempt from the issues plaguing the retail pharmacy industry. CVS has been in the process of closing 900 stores nationwide, and Walgreens is planning to close 150 U.S. stores by the end of the current fiscal year, according to CNN.

In a statement released on Oct. 17, Rite Aid announced that it has secured up to $3.45 billion in fresh financing from some of its existing lenders, allowing it to continue its operations through the bankruptcy process. The next hearing for the company’s bankruptcy case is scheduled for November 16.