Rite Aid successfully negotiates bankruptcy settlement with lenders, DOJ, and McKesson, sources report

Rite Aid successfully negotiates bankruptcy settlement with lenders, DOJ, and McKesson, sources report

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© Reuters. FILE PHOTO: A Rite Aid sign is seen outside one of their stores in New York, April 11, 2013. REUTERS/Shannon Stapleton/File Photo

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By Dietrich Knauth

NEW YORK (Reuters) – Drug chain Rite Aid (NYSE:) has reached an agreement with its lenders, the U.S. Department of Justice and drug supplier McKesson Corp (NYSE:), paving the way for Rite Aid to finalize its bankruptcy filing by the end of April, a company lawyer said Tuesday.

“We have reached agreement on all key points with all major economic players,” Rite Aid lawyer Aparna Yenamandra said during a hearing in bankruptcy court in Trenton, New Jersey. Yenamandra did not provide details of the settlement, saying some issues needed to be resolved before it could be presented in court.

The deal does not currently have support from creditors who have sued Rite Aid over its sale of opioid drugs, according to Arik Preis, an attorney representing Rite Aid’s opioid creditors. Before filing for bankruptcy, Rite Aid faced more than 1,600 lawsuits alleging the pharmacy chain ignored red flags and illegally filled prescriptions for addictive opioid medications.

Rite Aid’s lawyers said they would work to resolve issues with the deal by Thursday.

“The time has come to come to a resolution, and that’s exactly what everyone is going to do in the next 48 hours,” Joshua Sussberg, an attorney for Rite Aid, said during the hearing.

Rite Aid will return to court Thursday, when it will ask U.S. Bankruptcy Judge Michael Kaplan to allow the company to begin gathering votes for its bankruptcy plan. Kaplan said he was “very intrigued” to hear more details about the settlement at the next court hearing.

If Rite Aid can begin the voting process this week, it should be able to get final court approval of its bankruptcy restructuring by April 22, Yenamandra said.

Rite Aid filed for bankruptcy in October, seeking to address its high debt load, close underperforming outlets and sell non-core business units. Rite Aid received bankruptcy court approval to sell its pharmacy benefits company, Elixir, in January.

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