In a recent Bloomberg article, Thompson Coburn partner Mark Indelicato discussed Rite Aid’s return to Chapter 11 bankruptcy. This development follows the pharmacy chain’s emergence from bankruptcy last September, after incurring $355 million in fees to manage its finances.
Rite Aid’s advisers deftly navigated a “complicated bankruptcy,” which helps explain the cost the company incurred, Mark said. The turnaround plan, dubbed Rite Aid 2.0, included cutting $2 billion in debt and securing $2.5 billion in fresh funding, although access to part of the funds was tied to the company reaching certain milestones.
Rite Aid’s inability to secure the amount of liquidity it anticipated was an unexpected blow that likely ruined any chance the company had of turning around the business, Mark said.
“When one of those cogs doesn’t fit into place, sometimes it has no effect of the structural integrity of the plan,” he said. “Sometimes it brings the whole house of cards down.”
Click here to read the full article (subscription required).
