Rite Aid closing at least 63 stores

[storewanderer]

This Reddit thread is HIGHLY concerning. They basically promised a block of laid off employees (not clear exactly how many- it appears this impacts the block of corporate office employees laid off some weeks back at a minimum) severance, then took it out of the account after the direct deposit occurred, and issued a communication basically saying they had to not follow through with the promised payments due to "cash preservation efforts:"

I would be very curious what states they pulled this in. I bet they did not claw back payments in CA.

~ttps://www.reddit.com/r/RiteAid/comments/1b8w2 ... _reversal/

" We are writing to you to provide an update from our message earlier today, as part of a group of former employees due to receive a severance payment today, March 7. Rite Aid is continuing to take proactive, critical actions over the coming weeks as we prepare to emerge from bankruptcy. Over the course of our restructuring, we have had to make several very difficult decisions, including store closures and reductions in force, that were necessary to position the Company to move forward under our new business plan – Rite Aid 2.0.



We must now take another difficult action to further preserve cash in the short-term. This is necessary in order to best position Rite Aid to emerge from this process as a more financially stable company. As part of these cash-preservation efforts, severance payments due to be distributed on March 7 have been delayed. It remains our intention to make these payments to you. Given the fluid nature of the situation, we are not able to provide a definitive timeline for distribution at this time."



Rite Aid intends to move through the remaining court-supervised process as quickly as possible. We are continuing to evaluate the situation and will follow up with you when we have additional information.



We recognize and apologize for the impact this has on you, and we are working as quickly as possible to resolve this matter. We also recognize this will likely raise additional questions, and while we do not have more information at this time, we are committed to keeping you informed of further developments. With that understanding, if you would like to reach out to HR you can do so at..... "

[ClownLoach]

This Reddit thread is HIGHLY concerning. They basically promised a block of laid off employees (not clear exactly how many- it appears this impacts the block of corporate office employees laid off some weeks back at a minimum) severance, then took it out of the account after the direct deposit occurred, and issued a communication basically saying they had to not follow through with the promised payments due to "cash preservation efforts:"

I would be very curious what states they pulled this in. I bet they did not claw back payments in CA.

~ttps://www.reddit.com/r/RiteAid/comments/1b8w2 ... _reversal/

" We are writing to you to provide an update from our message earlier today, as part of a group of former employees due to receive a severance payment today, March 7. Rite Aid is continuing to take proactive, critical actions over the coming weeks as we prepare to emerge from bankruptcy. Over the course of our restructuring, we have had to make several very difficult decisions, including store closures and reductions in force, that were necessary to position the Company to move forward under our new business plan – Rite Aid 2.0.



We must now take another difficult action to further preserve cash in the short-term. This is necessary in order to best position Rite Aid to emerge from this process as a more financially stable company. As part of these cash-preservation efforts, severance payments due to be distributed on March 7 have been delayed. It remains our intention to make these payments to you. Given the fluid nature of the situation, we are not able to provide a definitive timeline for distribution at this time."



Rite Aid intends to move through the remaining court-supervised process as quickly as possible. We are continuing to evaluate the situation and will follow up with you when we have additional information.



We recognize and apologize for the impact this has on you, and we are working as quickly as possible to resolve this matter. We also recognize this will likely raise additional questions, and while we do not have more information at this time, we are committed to keeping you informed of further developments. With that understanding, if you would like to reach out to HR you can do so at..... "

This is indicative of exhausting the DIP financing which I was very concerned about. Or the lenders (the creditors) getting cold feet and backing up. This is the same kind of thing that happened in the BB&B bankruptcy with the retirement matches that never got deposited and severance that never got paid (without the employee filing a claim directly with the court, which most people don't know how to do).

I hope that I am wrong. If the DIP is exhausted that can push the company right into a court run bankruptcy auction, and that may be a situation where the court makes the decisions not the creditors to prevent conflicts of interest. They could easily force a liquidation. This is a very, very concerning turn of events.

[storewanderer]

https://www.abc27.com/local-news/rite-a ... -negative/

Article from real news source basically repeating Reddit post...

And those sign walker ads in the back of my mind...

[reymann]

Now that i've seen a verified news story about

by storewanderer » 9 minutes ago

https://www.abc27.com/local-news/rite-a ... -negative/

That may be the nail in the coffin for Rite Aid. I just wonder how long it's now going to take for the courts to approve liquidation. Thrifty was very wise to partner with Albertsons to sell their ice cream. They may start making their way up to Safeway in NorCal in the coming weeks.

[storewanderer]

Hopefully in the morning Friday we hear all these folks who were owed severance got paid.

Because if no pay Friday then definitely won't be seeing any pay until at least Monday...

Can't figure out how they can do a direct deposit then reverse/void it. I've never heard of that. Maybe happened on the bank's end due to something. I don't want to speculate.

[ClownLoach]

If the DIP is exhausted then the likely reason is lack of sales, which results in negative cash flow. But what should be more concerning is the creditors taking over could have written a check to bail them out and just renegotiated the terms of the DIP or post BK credit line which nobody would oppose. Obviously that did not happen and they are now in a cash crunch. That means that these creditors have lost interest in any going concern acquisition and have likely given up on Rite Aid. They are going to accept the fate of getting pennies on the dollar and writing off the rest of their losses then washing their hands of the company. I'm very disappointed because I really believed that the company was going to be fine, but it appears to me that once again the fickle consumer has no clue what bankruptcy means and translates to "it's going out of business" which then leads to that exact fate. The DIP financing plans are always established with open books and assume problems will happen, but obviously sales are far worse than even the most pessimistic estimates that the DIP was funded with. The news that any kind of employee level pay was clawed back for "cash management" is the darkest omen possible. It unfortunately is a sign that things behind the scenes are unraveling very fast and the consequences will become visible within days at the most. Very sad.

[ClownLoach]

Can't figure out how they can do a direct deposit then reverse/void it. I've never heard of that. Maybe happened on the bank's end due to something. I don't want to speculate.

Direct deposit can be reversed by the employer within 72 hours of initial advice of payment. Advice usually is the day before (when your bank might show pending). They tell the bank payment was made in error to cancel it. Thus this was absolutely intentional. They probably halted these checks to make regular payroll. Obviously they lied to the bank in claiming the check was an error, and that is why alarm bells are going off everywhere. This means short of a cash windfall from sales they might be unable to make the next payroll either.

[storewanderer]

If the DIP is exhausted then the likely reason is lack of sales, which results in negative cash flow. But what should be more concerning is the creditors taking over could have written a check to bail them out and just renegotiated the terms of the DIP or post BK credit line which nobody would oppose. Obviously that did not happen and they are now in a cash crunch. That means that these creditors have lost interest in any going concern acquisition and have likely given up on Rite Aid. They are going to accept the fate of getting pennies on the dollar and writing off the rest of their losses then washing their hands of the company. I'm very disappointed because I really believed that the company was going to be fine, but it appears to me that once again the fickle consumer has no clue what bankruptcy means and translates to "it's going out of business" which then leads to that exact fate. The DIP financing plans are always established with open books and assume problems will happen, but obviously sales are far worse than even the most pessimistic estimates that the DIP was funded with. The news that any kind of employee level pay was clawed back for "cash management" is the darkest omen possible. It unfortunately is a sign that things behind the scenes are unraveling very fast and the consequences will become visible within days at the most. Very sad.

Inventory has been problematic again in recent weeks; there are more out of stocks in recent weeks than there were back in late January. It feels like right as it felt "normal" it started to slip again. So I am guessing issues with cash caused less inventory buys in February and now this is why out of stock issues are looking more common now than a month ago.

They haven't really tried to increase sales in stores staying open... no customer retention efforts at closing stores that I've seen...

I also wonder if the 2024 PBM reimbursements are so terrible and wholesale drug costs have increased more than expected so whatever forecasts they had for the company are not being met and now they have two months of 2024 that did not meet expectations and have led to this problem.

Looking at independent pharmacies reporting closure in 2024 there are comments of the 2024 PBM reimbursement rates being even worse than 2023. Also I don't know what percent of Rite Aid's pharmacy business was Elixr but now that they sold Elixr someone else is getting that profit... I wonder if Elixr being gone is also part of the issue causing a cash crunch.

Clearly something has gone wrong with forecasts and performance... and at this state nearly 5 months into a bankruptcy there is not much room for that kind of situation.

[veteran+]

This Reddit thread is HIGHLY concerning. They basically promised a block of laid off employees (not clear exactly how many- it appears this impacts the block of corporate office employees laid off some weeks back at a minimum) severance, then took it out of the account after the direct deposit occurred, and issued a communication basically saying they had to not follow through with the promised payments due to "cash preservation efforts:"

I would be very curious what states they pulled this in. I bet they did not claw back payments in CA.

~ttps://www.reddit.com/r/RiteAid/comments/1b8w2 ... _reversal/

" We are writing to you to provide an update from our message earlier today, as part of a group of former employees due to receive a severance payment today, March 7. Rite Aid is continuing to take proactive, critical actions over the coming weeks as we prepare to emerge from bankruptcy. Over the course of our restructuring, we have had to make several very difficult decisions, including store closures and reductions in force, that were necessary to position the Company to move forward under our new business plan – Rite Aid 2.0.



We must now take another difficult action to further preserve cash in the short-term. This is necessary in order to best position Rite Aid to emerge from this process as a more financially stable company. As part of these cash-preservation efforts, severance payments due to be distributed on March 7 have been delayed. It remains our intention to make these payments to you. Given the fluid nature of the situation, we are not able to provide a definitive timeline for distribution at this time."



Rite Aid intends to move through the remaining court-supervised process as quickly as possible. We are continuing to evaluate the situation and will follow up with you when we have additional information.



We recognize and apologize for the impact this has on you, and we are working as quickly as possible to resolve this matter. We also recognize this will likely raise additional questions, and while we do not have more information at this time, we are committed to keeping you informed of further developments. With that understanding, if you would like to reach out to HR you can do so at..... "

I believe your suspicions were valid!

Something is rotten in the state of Denmark.

[ClownLoach]

Interesting article from Bloomberg Law.

https://news.bloomberglaw.com/antitrust ... mail_Share