Rite Aid: $4B Debt and Complete Liquidation After Two Filings

Rite Aid Corporation, once the third-largest pharmacy chain in America, shuttered its final 89 stores in October 2025, ending a 63-year operating history after two chapter 11 cases filed less than two years apart. The company first filed for chapter 11 bankruptcy on October 15, 2023 in the U.S. Bankruptcy Court for the District of New Jersey (No. 23-18993), with $4 billion in funded debt and more than 1,600 opioid lawsuits. The company, which operated over 2,100 stores in 17 states and employed more than 40,000 people, was one of the large pharmacy chains to file chapter 11 without a prearranged opioid settlement with plaintiffs.

Rite Aid emerged from bankruptcy in September 2024 with $2 billion in debt eliminated and $2.5 billion in exit financing. Eight months later, the company filed for bankruptcy again, and the second case ended in complete liquidation, with a liquidating plan taking effect on December 31, 2025.

Debtor(s)	Rite Aid Corporation (First Case); New Rite Aid, LLC (Second Case)
Case Number	23-18993; 25-14861
Court	U.S. Bankruptcy Court, District of New Jersey
Judge	Hon. Michael B. Kaplan
Petition Date	October 15, 2023; May 5, 2025
First Emergence	September 3, 2024
Second Plan Confirmed	November 26, 2025
Second Effective Date	December 31, 2025
Outcome	Complete liquidation (final stores closed October 2025)
Pre-Filing Debt	~$4 billion
Debt Eliminated (First Case)	~$2 billion
Exit Financing (First Case)	$2.5 billion
DIP Facility	$3.45 billion (First Case); $1.94 billion (Second Case)
Opioid Lawsuits	1,600+
DOJ Settlement	$7.5M cash + $401.8M allowed claim
Elixir PBM Sale	$576.5 million to MedImpact
Store Count (Peak)	5,000+
Store Count (Final)	0 (October 2025)
Preference Actions Filed	~950
Table: Case Snapshot

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Founding and Expansion to 5,000 Stores

Alex Grass founded Rite Aid in 1962 as Thrift D Discount Center in Scranton, Pennsylvania, building on his earlier venture, Rack Rite Distributors, which he had launched in 1958. The company expanded rapidly throughout the 1960s and 1970s, eventually rebranding as Rite Aid Corporation. By 1983, Rite Aid became the first drugstore chain to reach $1 billion in sales. Under his leadership as CEO from 1962 to 1995, Rite Aid grew into one of the largest U.S. pharmacy chains.

The company's growth accelerated through strategic acquisitions. The purchase of Thrifty PayLess in 1996 and the Brooks and Eckerd chains in 2007 pushed Rite Aid's store count past 5,000 locations at its peak, making it the nation's largest drugstore chain by store count and second-largest by sales. By 1995, Rite Aid had claimed the number-one position in store count among American pharmacies.

Prior to bankruptcy, Rite Aid operated two core business segments. The Retail Pharmacy segment comprised the brick-and-mortar stores offering prescription services, front-end merchandise, and healthcare services including immunizations and point-of-care testing. The Pharmacy Services segment, organized under the Elixir brand, provided comprehensive pharmacy benefit management (PBM) offerings, mail-order pharmacy, specialty pharmacy, and Medicare Part D plan administration. In fiscal year 2023, the company reported $24.1 billion in revenue.

Failed Walgreens Merger and Opioid Litigation

Two failed mergers reduced Rite Aid's scale in the years before bankruptcy. In 2015, Walgreens announced a $9.4 billion acquisition bid for Rite Aid, which would have combined the second and third-largest pharmacy chains. However, FTC antitrust concerns blocked the full merger. Instead, Walgreens acquired 1,932 Rite Aid stores for $4.375 billion in a partial transaction completed in March 2018, along with three distribution centers. That same year, a planned merger with Albertsons ended, leaving Rite Aid with fewer stores and continued debt.

Beyond the failed mergers, Rite Aid faced extensive opioid-related litigation. At the time of its bankruptcy filing, the company was defending more than 1,600 opioid lawsuits. On March 13, 2023, the U.S. Department of Justice filed a civil complaint accusing Rite Aid of ignoring "red flags" and inappropriately dispensing opioids in violation of the False Claims Act and Controlled Substances Act. Rite Aid was one of the large pharmacy chains to file chapter 11 without a prearranged agreement with opioid plaintiffs. A separate data breach class action (Margaret Bianucci, et al.) added another litigation matter. The breach, discovered in June 2024, affected approximately 2.2 million individuals. A proposed $6.8 million non-reversionary settlement fund—to be funded from Rite Aid's cyber insurance coverage—attracted over 56,000 claims, with final approval pending in the second bankruptcy proceeding.

The company faced declining front-end sales, lower pharmacy reimbursement driven by PBM dynamics and preferred network arrangements, and competition from CVS, Walgreens, Walmart, Target, and Amazon. Cost-cutting measures did not offset those pressures. In the year ending September 2023, Rite Aid closed approximately 210 stores while continuing to carry rent obligations on vacated leases. In 2020, the company had launched RxEvolution, a $700 million two-year investment to reposition pharmacists as frontline healthcare providers.

First Filing, DIP Financing, and Elixir Sale

Rite Aid Corporation filed its chapter 11 petition in the U.S. Bankruptcy Court for the District of New Jersey on October 15, 2023, assigned to Judge Michael B. Kaplan. The court set a general claims bar date of January 12, 2024, and creditors filed over 438,000 claims. The case proceeded through plan confirmation on August 16, 2024 and emergence on September 3, 2024.

Capital structure at filing.

At the time of filing, Rite Aid reported $3.999 billion in total funded debt obligations and approximately $524 million in liquidity—comprising $134 million in cash and $390 million in available borrowing capacity.

Facility	Maturity	Principal
ABL Facility (secured)	August 2026	$2.223B
FILO Term Loan (secured)	August 2026	$400M
7.500% Secured Notes	July 2025	$320M
8.000% Secured Notes	November 2026	$850M
Unsecured Notes (2027/2028)	2027/2028	$188M
Total Funded Debt		$3.999B

An ad hoc group of secured noteholders provided $3.45 billion in DIP financing to fund operations during the restructuring.

On November 2, 2023, the U.S. Trustee appointed an Official Committee of Unsecured Creditors (UCC) comprising nine members:

• Benderson Development Company, LLC
• McKesson Corporation
• Computershare Trust Company, N.A.
• United Food and Commercial Workers International Union
• MCS Advantage, Inc.
• Realty Income Corporation
• Loyd F. Schmuckley, Jr., Relator
• Humana Health Plan, Inc.
• Pension Benefit Guaranty Corporation

Akin Gump Strauss Hauer & Feld LLP served as lead counsel to the UCC, with FTI Consulting as financial advisor.

The DIP financing comprised a $2.85 billion asset-based revolving credit facility (SOFR + 3.25%), a $400 million FILO term loan (SOFR + 5.25%), and a $200 million new money term loan (SOFR + 7.50%). The court approved the financing on an interim basis shortly after filing, enabling operations to continue.

Simultaneously, Rite Aid appointed Jeffrey S. Stein as Chief Executive Officer and Chief Restructuring Officer. Stein, who brought three decades of restructuring experience to the role, succeeded interim CEO Elizabeth Burr and was tasked with guiding the company through the bankruptcy process.

During the first case, Rite Aid sold its Elixir Solutions PBM business. After marketing the business to more than 30 potential buyers, MedImpact Healthcare Systems was the winning bidder. The court approved the sale in January 2024, and the transaction closed on February 1, 2024 for approximately $576.5 million. Rite Aid had acquired EnvisionRx (later Elixir) in 2015 for $2 billion.

2024 Reorganization Plan and Exit Financing

The bankruptcy court confirmed Rite Aid's reorganization plan on August 16, 2024, and the company emerged on September 3, 2024. Under the plan structure, only Class 5 (Senior Secured Notes Claims) was entitled to vote. That class voted to accept the plan, with 99.98% acceptance by amount and 99.73% by number, and holders of more than 87% of senior secured notes principal supporting confirmation.

The restructuring eliminated approximately $2 billion in debt and provided $2.5 billion in exit financing. Bank of America, N.A. served as administrative agent, with BofA Securities as lead arranger. The lending syndicate included Wells Fargo, Capital One, PNC, MUFG, Fifth Third, ING Capital, and Truist as issuing banks. In addition to the primary exit facilities, the plan provided for $88 million in Exit 1.5 Lien Notes (SOFR + 7.00%, PIK for first 12 months then cash pay) and $350 million in Takeback Notes (15.00% PIK). The ABL and FILO facilities carried performance-based pricing grids tied to availability and a 0.50% commitment fee on unused amounts.

Facility	Amount	Interest Rate	Maturity
Exit ABL Revolving	$2.25B	SOFR + 2.75% to 3.25% (grid)	2028
Exit FILO Term Loan	$300M	SOFR + 4.75% to 5.25% (grid)	2028
Exit 1.5 Lien Notes	$88M	SOFR + 7.00% (PIK/cash)	—
Takeback Notes	$350M	15.00% PIK	—

During the bankruptcy, Rite Aid closed more than 520 stores, leaving approximately 1,250 locations at emergence. The confirmed plan provided for the following treatment of claims:

Class	Description	Treatment
Class 2	2025/2026 Secured Notes	Pro rata New Common Stock + Takeback Notes + Exit 1.5 Lien Notes
Class 3	Other Secured Claims	As agreed or collateral realization
Class 6	General Unsecured Claims	Pro rata New Common Stock
Class 7	Senior Unsecured Notes	Pro rata New Common Stock
Class 8	Existing Equity	Cancelled and extinguished (no recovery)

A GUC Equity Trust was established to receive approximately 10% of certain assigned claims. The reorganized company emerged as a private entity owned by its former creditors.

The reorganization plan resolved the majority of Rite Aid's opioid litigation. The DOJ settlement, finalized in July 2024, required a $7.5 million cash payment and established a $401.8 million allowed unsecured claim for violations of the False Claims Act and Controlled Substances Act. An Opioid Settlement Agreement was integrated into the confirmed plan, addressing the thousands of lawsuits that had involved the company. Rite Aid's approach—resolving opioid claims through bankruptcy—reflected the enforcement focus on pharmacy "corresponding responsibility" under the Controlled Substances Act.

Upon emergence, Rite Aid named Matt Schroeder as CEO. Schroeder had joined Rite Aid in 2000 and served as CFO since March 2019. Monthly operating reports showed a net loss of $(18.5 million) in August 2024, cumulative net losses during the case of $(215.9 million), a net worth deficit of $(3.56 billion), and revolving draws exceeding $1.2 billion.

Post-Emergence Vendor Terms and Liquidity Decline

Following the August 30, 2024 effective date, Rite Aid began implementing its post-emergence business plan, which the second-case filings said was quickly "derailed by significant challenges." The DIP/cash collateral motion described Rite Aid's relationship with McKesson Corporation, the pharmaceutical supplier. Post-emergence, McKesson tightened trade terms—requiring cash in advance for deliveries and reducing credit availability. Other vendors similarly continued imposing restrictive trade terms after emergence. Access to incremental funding was delayed and limited. The filings described a sequence in which restrictive vendor terms reduced inventory, sales declined, and liquidity constraints increased.

The motion also cited elevated labor costs, declining reimbursement as Medicare Part D plans adopted preferred pharmacy networks, reduced front-end demand, increased shrinkage, consumer shifts toward mail-order and digital pharmacy, and the working-capital impact of a large lease portfolio. Rite Aid amended its ABL facility in January 2025 for incremental liquidity, but by late April 2025 a marketing process had yielded only seven indications of interest, and the debtors concluded an out-of-court sale was unlikely. The second chapter 11 petition followed on May 5, 2025.

2025 Liquidation and Pharmacy Asset Sales

On May 5, 2025, New Rite Aid, LLC and affiliates filed for chapter 11 bankruptcy for the second time in less than two years. The DIP financing motion filed on the petition date attributed the second filing to lower-than-expected liquidity, strained vendor relations, declining consumer spending, and competitive pressures that had produced negative adjusted EBITDA since November 2024. The case was again assigned to Judge Kaplan in Newark, and unlike the first case—which aimed at reorganization—the second case focused on complete liquidation.

The debtors carried approximately $2.161 billion of funded debt into the second case, almost all of it originating from the August 2024 emergence. The prepetition credit facilities, governed by an August 30, 2024 credit agreement, comprised a roughly $1.46 billion ABL facility and a $240 million FILO term loan, both secured by first-priority liens and maturing August 30, 2028, with Bank of America, N.A. as administrative and collateral agent and Wells Fargo Bank, N.A. as co-borrowing base and syndication agent. The funded debt also included two series of senior secured notes issued at emergence and maturing in August 2031, with U.S. Bank Trust Company, N.A. as trustee: $83 million of 1.5L rollover notes and $377 million of 3L takeback notes.

The proposed $1.94 billion in debtor-in-possession financing—a $1.7 billion DIP revolving facility and a $240 million DIP FILO facility—carried a 12-month tenor, a 0.5% unused commitment fee on the revolver, and 1.00% upfront fees on the revolving commitment. The structure rolled roughly $600 million of revolving loans into the DIP on an interim basis and refinanced the remaining prepetition ABL and FILO obligations into the DIP facilities after final approval; by confirmation, the final order had rolled the full prepetition ABL principal and $180 million of prepetition FILO obligations into a $1.7 billion DIP ABL facility and a $180 million DIP FILO facility.

On May 19, 2025, the U.S. Trustee appointed a reconstituted Official Committee of Unsecured Creditors for the second case, comprising nine members:

• RAD Sub-Trust A
• RAD Sub-Trust B
• AmerisourceBergen Drug Corporation
• Pension Benefit Guaranty Corporation
• Realty Income Corporation
• United Food and Commercial Workers International Union
• Iron Mountain Information Management, LLC
• Computershare Trust Company, N.A.
• Evergreen-Partners, LLC d/b/a Evergreen Trading

Willkie Farr & Gallagher LLP and Sills Cummis & Gross P.C. served as co-counsel to the reconstituted UCC.

The court entered a bidding procedures order on May 21, 2025, approving an accelerated sale timeline for pharmacy assets—with bid deadline, auction, and sale hearing all scheduled within roughly two weeks of the petition. The second case proceeded through a bifurcated sale process. Phase 1, conducted in May 2025, auctioned pharmacy assets including prescription files and pharmacy inventory. Phase 2 addressed remaining assets including intellectual property, the Thrifty Ice Cream brand (sold to Hilrod Holdings L.P. for $19.2 million after a competitive auction that opened at $8 million), technology assets, and real estate. The court established lease sale procedures for disposing of the debtors' leasehold interests and fee-owned properties. Real property asset sales generated approximately $70 million in cash proceeds as of late August 2025, with the court issuing a notice of successful bidders for fee-owned property auctions. The pharmacy asset auction drew multiple buyers, led by CVS Pharmacy, which acquired 625 stores' prescription files across 15 states. Walgreens, Albertson's, Fred Meyer (Kroger), Giant Eagle, Weis Markets, and smaller buyers including 33 Rx Inc. and Jio Pharma acquired additional locations.

In total, more than 1,000 locations' prescription files and pharmacy assets were transferred to competitors. On October 3, 2025, Rite Aid closed its final 89 stores, ending operations entirely. The last locations to close included stores in Bainbridge Island, Washington and Bend, Oregon. CVS acquired the final stores' prescription files, ending Rite Aid's 63-year operating history. The store count had fallen from a peak above 5,000 to roughly 2,100 after the 2018 Walgreens sale, about 1,250 at the 2024 emergence, and zero by October 2025. The wind-down required rejection of hundreds of unexpired leases under a court-approved rejection procedures order.

On September 10, 2025, the U.S. Trustee objected to the debtors' motion for conditional approval of the disclosure statement and solicitation procedures, arguing the plan was "patently unconfirmable" because it relied on non-consensual third-party releases and overbroad exculpation provisions. The objection also challenged the proposed solicitation mechanics, including online-only submission of ballots and opt-out forms and the debtors' ability to make non-substantive changes without further court order.

The restructuring generated substantial professional fees. First interim fee orders approved in October 2025 showed Paul, Weiss, Rifkind, Wharton & Garrison (debtor's counsel) awarded $18.4 million; Alvarez & Marsal (financial advisor) awarded $15.7 million; Guggenheim Securities (investment banker) awarded $4.4 million; Cole Schotz (co-counsel) awarded $2.86 million; Willkie Farr & Gallagher (UCC counsel) awarded $2.17 million; and AlixPartners (UCC financial advisor) awarded $1.31 million.

Separately, Trustee Thomas A. Pitta filed approximately 950 adversary proceedings in October 2025 seeking preference and fraudulent transfer recoveries under § 547, § 548, and § 550 of the Bankruptcy Code, naming defendants including Pepsi-Cola, GNC Holdings, and Hain Celestial.

McKesson Global Settlement and Plan Confirmation

Although styled as a plan of reorganization, the second case resolved through a Global Settlement embodied in a restructuring support agreement rather than an operating reorganization. The restructuring support agreement bound the debtors, McKesson Corporation, and the "Consenting Banks"—Bank of America, N.A., Wells Fargo Bank, N.A., and Capital One, N.A.—together with consenting FILO lenders holding at least 50% of the prepetition FILO facility and consenting DIP lenders meeting the "Required Lenders" threshold. The settlement transferred the equity of the Reorganized Debtors to McKesson in exchange for full satisfaction of McKesson's section 503(b)(9) administrative claims plus $20 million in cash, increased from an initially proposed $15 million. McKesson also agreed to purchase branded inventory at 65% of invoice price and generic inventory at 40%, and the parties stayed pending debtor-McKesson litigation and exchanged mutual releases.

The settlement created an Administrative Claims Distribution Pool of up to $5 million of cash collateral to fund distributions to consenting holders of eligible administrative expense claims, with each opting-in claimant capped at 5.00% of its recorded claim amount. The disclosure statement stated that distributable proceeds were likely insufficient to repay the DIP financing lenders in full, given the DIP lenders' priming liens on substantially all assets—the structural reason junior classes received nothing.

The disclosure statement's liquidation analysis quantified the shortfall in a hypothetical chapter 7 scenario. Against an estimated $1,730 million DIP ABL claim, the analysis projected roughly $854 million to $933 million of distributable value—a 49.4% to 53.9% recovery on the DIP ABL claim alone and no recovery for any class junior to it, including the $208 million DIP FILO claim, the $69 million prepetition FILO claim, $84 million of 1.5L notes, $391 million of 3L takeback debt, and $237 million of administrative and priority claims.

The court confirmed the second amended plan on November 26, 2025. Class 3 prepetition FILO claims were the sole voting class; Class 1 other secured claims and Class 2 other priority claims were unimpaired; and Class 4 general unsecured claims, Class 7 existing equity interests, and Class 8 section 510(b) claims were deemed to reject. The order approved a liquidating-trust structure, with trust assets transferred free and clear and administered by a liquidating trustee, set to dissolve no later than five years after creation.

The confirmation order overruled the U.S. Trustee's challenge that the plan was unconfirmable for using non-consensual third-party releases and overbroad exculpation. The court treated the third-party release as consensual, supported by an opt-out construct under which holders in non-voting classes received opt-out forms on or around September 26, 2025 and certain parties received supplemental forms with a 21-day election window; any party that failed to opt out timely was deemed a releasing party. The exculpation provision was approved as tailored, with carve-outs for actual fraud, willful misconduct, and gross negligence, and it expressly reached ERISA claims. The order also imposed a gatekeeping provision requiring an opt-out holder to first obtain a final bankruptcy-court order—determining the claim is direct rather than a released derivative claim—before suing a released party, with the gatekeeper not applying to the liquidating trustee.

The plan became effective on December 31, 2025, making its discharge, release, exculpation, and injunction provisions binding on the debtors, wind-down debtors, and claim and interest holders. The court entered a final decree on December 30, 2025 closing New Rite Aid, LLC and the affiliate cases effective as of the plan effective date, while leaving Lakehurst and Broadway Corporation, case no. 25-14831, open as the central docket for remaining claims reconciliation, distributions, and wind-down administration by the liquidating trustee.

RAD Liquidating Trust and Claims Reconciliation

The December 31, 2025 effective date established the RAD Liquidating Trust and installed Eric Kaup as RAD Liquidating Trustee, the sole representative of the Wind-Down Debtors authorized to review, reconcile, and object to claims. Cole Schotz P.C.—Michael D. Sirota, Warren A. Usatine, David M. Bass, and Felice R. Yudkin—serves as counsel to the trust, which is set to dissolve no later than five years after creation.

On February 24, 2026, the trustee filed his First and Second Omnibus Objections to Certain Duplicative Claims, seeking to disallow and expunge duplicate filings from the claims register. Claims reconciliation continued through mid-2026 under the Lakehurst and Broadway Corporation docket left open by the final decree, with further omnibus and administrative-claim objection activity. On June 26, 2026, the trustee filed a stipulation governing turnover of chat data connected to a Kroll settlement-administration matter for the trust, carrying a July 6, 2026 objection deadline.

Pharmacy Industry Consolidation

Rite Aid's bankruptcy occurred during pharmacy industry consolidation. Over the past decade, the top three pharmacy chains have consolidated 50% of U.S. retail pharmacies. CVS's visit share grew from 41.9% to 44.0% between Q1 2023 and Q4 2024, while Walgreens' share increased from 49.2% to 50.4%. Smaller chains' share declined from 8.9% to 5.5% over the same period. The U.S. pharmacy market was valued at $732 billion in 2024, projected to reach $1.7 trillion by 2033.

Rite Aid's bankruptcy coincided with broader industry retrenchment. CVS has closed more than 1,000 stores since 2022, and Walgreens announced plans to close 1,200 locations by 2027.

Frequently Asked Questions

Why did Rite Aid file for bankruptcy?

Rite Aid filed in October 2023 with $4 billion in funded debt, more than 1,600 opioid lawsuits, declining sales, and intense competition from larger chains. A failed $9.4 billion merger with Walgreens in 2015 had left the company weakened with significant debt and reduced scale.

How much debt was eliminated in the first bankruptcy?

The first restructuring eliminated approximately $2 billion in debt and provided $2.5 billion in exit financing, including a $2.25 billion ABL revolving facility and $300 million FILO term loan.

What caused the second bankruptcy filing?

Post-emergence, McKesson and other vendors imposed restrictive trade terms requiring cash in advance for deliveries. Limited inventory led to customer losses, declining sales, and insufficient liquidity, which the debtors cited as reasons for the May 2025 filing.

Who bought Rite Aid's pharmacy assets?

CVS acquired 625 stores' prescription files across 15 states. Walgreens, Albertsons, Kroger (Fred Meyer), Giant Eagle, and Weis Markets acquired additional locations. More than 1,000 locations' pharmacy assets were transferred to competitors.

When did Rite Aid close its final stores?

Rite Aid closed its final 89 stores on October 3, 2025, ending 63 years of operations. The last locations included stores in Bainbridge Island, Washington and Bend, Oregon.

How was the opioid litigation resolved?

The DOJ settlement required a $7.5 million cash payment and established a $401.8 million allowed unsecured claim. An Opioid Settlement Agreement was integrated into the first confirmed plan.

What happened to the Elixir PBM business?

MedImpact Healthcare Systems acquired Elixir for approximately $576.5 million in February 2024. Rite Aid had originally acquired EnvisionRx (later Elixir) in 2015 for $2 billion.

How many stores did Rite Aid operate at its peak?

Rite Aid operated more than 5,000 stores at its peak following the 2007 Brooks/Eckerd acquisition. After selling 1,932 stores to Walgreens in 2018, approximately 2,100 remained at the first filing.

What professional fees were generated?

First interim fee orders approved in October 2025 awarded Paul Weiss (debtor counsel) $18.4 million, Alvarez & Marsal $15.7 million, and Guggenheim Securities $4.4 million. Total first interim professional fees exceeded $45 million across debtor and committee professionals.

Are there preference actions pending?

Trustee Thomas A. Pitta filed approximately 950 adversary proceedings in October 2025 seeking preference and fraudulent transfer recoveries from vendors including Pepsi-Cola, GNC Holdings, and Hain Celestial.

Who is the claims agent for Rite Aid?

Kroll Restructuring Administration LLC serves as the claims and noticing agent for both the first and second Rite Aid bankruptcy cases. The first case set a general claims bar date of January 12, 2024 and drew more than 438,000 filed claims; the liquidating trustee now administers remaining claims reconciliation in the second case under the Lakehurst and Broadway Corporation docket that stayed open after the December 30, 2025 final decree.

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