FILE PHOTO: A woman shops inside of a Rite Aid store underneath a DeepCam security camera in New York City, New YorkNEW YORK - Rite Aid, one of the largest U.S. pharmacy chains, received permission from a U.S. judge on Thursday to begin voting on a bankruptcy restructuring plan that would turn over most of the company's equity to its bondholders, while still leaving open the possibility of a sale.
Rite Aid's bankruptcy plan, revised on Thursday, would cut $2 billion in debt and provide $47.5 million to junior creditors, including individuals and local governments who have sued the company for allegedly ignoring red flags and illegally filling prescriptions for addictive opioid medication. No other group will be entitled to vote in Rite Aid's bankruptcy, and the bondholders' votes are due on April 15.
Attorneys representing Rite Aid's junior creditors, including its opioid creditors, said that they supported the settlements and they did not object to their clients' inability to vote in the bankruptcy. Junior creditors will also receive a 10% equity stake in the reorganized Rite Aid, as well as the ability to pursue additional recoveries through further litigation or insurance payouts.
Rite Aid expects to seek final court approval of its restructuring on April 22. It received bankruptcy court approval to sell its pharmacy benefit company, Elixir, in January.
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