Pharmacy chain Rite Aid received the go-ahead from a U.S. judge Thursday to begin voting on a bankruptcy restructuring plan that would turn over most of the company’s equity to its bondholders, while still keeping the possibility of a sale on the table.
U.S. Bankruptcy Judge Michael Kaplan approved Rite Aid’s voting proposal at a court hearing in Trenton, New Jersey, saying that the bankruptcy case needed to move quickly to avoid further restructuring costs that could push the company into liquidation.
“Every day engenders additional cost and risk,” Kaplan said in a report from Bloomberg. “We just don’t have the luxury of kicking this can down the road any more.”
Rite Aid filed for bankruptcy in October, in the midst of facing $3.3 billion in debt. The Camp Hill, Pa.-based retailer has since closed hundreds of stores.
The pharmacy retailer’s bankruptcy plan, revised on Thursday, would cut $2 billion in debt and provide some $47.5 million to junior creditors, including both individuals and local governments who have sued the company around its mishandling of opioid medications.
Rite Aid, which has denied wrongdoing with regard to the opioid lawsuits, is still finalizing some of the settlements within the restructuring, including an agreement that would resolve a U.S. Department of Justice investigation into Rite Aid’s opioid sales.
Rite Aid was facing more than 1,600 lawsuits that accused the retailer of ignoring red flags and illegally filling opioid medication prescriptions. Rite Aid attorney Aparna Yenamandra said Tuesday that opioid creditors also agree with the terms of the bankruptcy settlement.
No other group will be entitled to vote in Rite Aid’s bankruptcy, and the bondholders’ votes are due April 15.
If the plan clears the voting process, Rite Aid should receive final court approval of the bankruptcy restructuring by April 22.