NEW YORK — On Tuesday Rite Aid got court approval for a bankruptcy loan that would let the company borrow an additional $200 million, while agreeing to enter mediation with committees representing junior creditors and people who have accused the company of contributing to the U.S. opioid epidemic.
Rite Aid’s bankruptcy financing, which the company valued at $3.45 billion due to its refinancing of pre-existing debts, had been opposed by the U.S. government, Rite Aid’s creditors committee, and a committee representing plaintiffs suing the company, including those with opioid-related claims.
Those committees have argued that Rite Aid’s lenders are the only group that stands to benefit from the company’s restructuring, and that victims impacted by the opioid crisis currently stand to get next to nothing out of the bankruptcy. They withdrew their objections after Rite Aid promised to mediate their concerns in January.
Rite Aid, which operates about 2,000 retail pharmacies in 17 U.S. states, filed for bankruptcy protection on Oct. 15, seeking to close underperforming stores, sell its pharmacy benefit company Elixir and resolve over 1,600 lawsuits alleging it fueled the opioid epidemic by filling illegal or suspicious prescriptions.
U.S. Bankruptcy Judge Michael Kaplan at a hearing in Trenton, New Jersey, said he would approve the financing after he had time to review Rite Aid’s last-minute revisions to the agreements. Some of those revisions addressed Justice Department (DOJ) concerns about legal terms that could have interfered with government oversight of Elixir, Kaplan said.