Rite Aid emerges from bankruptcy protection

BY Richard Summerfield

US pharmacy chain Rite Aid Corporation has emerged from Chapter 11 bankruptcy protection after successfully completing its restructuring process.

The company has eliminated $2bn in debt and said it has “received approximately $2.5 billion in exit financing to support the business going forward.”

Following its emergence from Chapter 11, Rite Aid will operate as a privately held company owned by creditors, operating “more than 1700 retail pharmacy locations across 16 states with a workforce of more than 45,000 strong”, according to the company’s website. Rite Aid closed more than 500 stores during the bankruptcy proceedings.

Separately, Rite Aid has announced that Matt Schroeder, who most recently served as chief financial officer, has been appointed its new chief executive. He succeeds Jeffrey S. Stein, who joined the company as chief executive and chief restructuring officer to lead the court-supervised Chapter 11 process.

“Emergence is a pivotal moment in Rite Aid’s history, enabling it to move forward as a significantly transformed, stronger and more efficient company,” said Mr Stein. “We are grateful for the ongoing support of our customers, associates and partners, and we look forward to continuing to provide leading pharmacy services designed to improve health and wellness outcomes across the communities we serve. I am excited about Rite Aid’s future as it continues to focus on executing its strategy and delivering for its customers and stakeholders.”

“I am honored to lead Rite Aid on its journey as we continue serving our customers and communities,” said Mr Schroeder. “Thanks to the dedication of the entire organization, we are beginning our next phase as a transformed company. I see Rite Aid’s remarkable potential, and I look forward to working with the team as we remain committed to our purpose of helping our customers achieve whole health for life.”

Rite Aid filed for Chapter 11 bankruptcy in October 2023, in light of significant financial challenges. The company recorded $750m in losses against $24bn in revenue for the prior fiscal year. As part of the restructuring, in addition to closing hundreds of locations, the company agreed to sell its pharmacy benefit unit Elixir, and settle with key creditors, including McKesson.

The plan also allocates $47.5m to junior creditors involved in opioid-related litigation, addressing claims from individuals and local governments. Prior to its Chapter 11 filing, Rite Aid faced 1600 opioid lawsuits, including one by the federal government alleging that the company ignored potential concerns when filling suspicious prescriptions for addictive opioid pain medication.

News: US pharmacy chain Rite Aid to operate as a private company as it emerges from bankruptcy

Scandinavian airline SAS emerges from Chapter 11

BY Fraser Tennant

In what it hails as a new era for the company, Scandinavian airline SAS has successfully completed its restructuring proceedings and emerged from Chapter 11 bankruptcy in the US, in addition to a similar simultaneous reorganisation process in Sweden.  

The airline emerges from Chapter 11 as a financially robust company with a strengthened capital structure and substantial liquidity, having made significant progress with operational improvements and in building a competitive business.

Over the course of the restructuring proceedings – which were supported by nearly all creditors voting in the respective restructuring proceedings in the US and Sweden – SAS has successfully restructured more than $2bn of debt, adjusted its aircraft fleet and related costs and reached agreements with key stakeholders, creditors and vendors.

“We have successfully completed our restructuring proceedings and we are now entering a new era,” said Anko van der Werff, president and chief executive of SAS. “It has been a complex process and I am thankful for the constructive collaboration with creditors and partners, for the valuable support from the board, as well as impressive efforts, energy and enthusiasm throughout our organisation.”

The new principal owners of the reorganised company – Castlelake, Air France-KLM, Lind Invest and the Danish state – have agreed to appoint a new board of directors for SAS, which will be led by Kåre Schultz, as chairman of the board, replacing resigning chairman Carsten Dilling.

“I am honoured to be appointed as new chairman of SAS, and I look forward to leading the board’s work as SAS continues its proud legacy as Scandinavia’s leading airline,” said Mr Schultz. “SAS has done a truly impressive job in navigating through the restructuring proceedings, and in building a competitive business positioned for growth.”

This business includes a continued positive development for passenger demand with 18 million passengers traveling with SAS so far in 2024 – a 6.5 percent increase from the same period in 2023.

Mr Schultz concluded: “Together with SAS’ new investors, board and management, we will continue to collaborate with partners and customers to drive transformative changes in aviation.”

News: Scandinavian airline SAS hails 'new era' as it exits US bankruptcy process

Blink Fitness files for Chapter 11 bankruptcy

BY Fraser Tennant

Largely as a result of the lingering effects of the coronavirus (COVID-19) pandemic, affordable gym chain Blink Fitness has filed for Chapter 11 bankruptcy protection in order to facilitate a sale process.

According to court filings, the pandemic forced Blink to shut its operations for nine months which incurred additional debt and deferred rent obligations, leaving the company approximately $280m in debt.

Despite this, the company has demonstrated continuous improvement in its financial performance over the past two years with revenue increasing by nearly 40 percent. In 2024, it expects to build on this momentum and deliver the best top and bottom line performance over the last five years.

Blink also remains committed to its recently announced strategic initiatives to reinvigorate its most popular gyms, elevate its member experience and deepen its community connections, with a continued focus on democratising fitness for all.

“Over the last several months, we have been focused on strengthening Blink’s financial foundation and positioning the business for long-term success,” said Guy Harkless, president and chief executive of Blink Fitness. “After evaluating our options, the board and management team determined that using the court-supervised process to optimise the company’s footprint and effectuate a sale of the business is the best path forward and will help ensure Blink remains the destination for all people seeking an inclusive, community-focused gym.”

In connection with the court-supervised process, Blink has received a commitment of $21m in new debtor-in-possession financing from its existing lenders. Once approved by the court, this new financing, combined with cash generated from the company’s ongoing operations, will support the business during the Chapter 11 process, including paying employee wages and benefits without interruption.

Known for its commitment to an all-inclusive environment, Blink operates in more than 100 locations across the US, including New York, New Jersey, Pennsylvania, California, Illinois, Massachusetts and Texas.

“We thank our entire corporate and gym team for their continued dedication to our members, as well as our vendors and partners for their ongoing support,” concluded Mr Harkless. “We look forward to emerging from this process as an even stronger business.”

News: Blink Fitness files for bankruptcy to pursue sale

Software provider Mobileum files for Chapter 11

BY Fraser Tennant

In a bid to trim a debt of more than $500m, telecommunications services provider Mobileum and certain of its US-based affiliates has filed for Chapter 11 bankruptcy in order to complete a restructuring support agreement (RSA).

The RSA, which has the full support of its key financial partners, will strengthen Mobileum’s financial foundation, significantly deleverage its capital structure and provide the company with $60m of new money through a debtor-in-possession (DIP)-to-exit facility.

The Chapter 11 filing does not include any of Mobileum’s non-US subsidiaries, and the company’s international operations are not part of the court-supervised restructuring process. Additionally, the RSA contemplates that trade vendors and suppliers will be paid in full under normal terms for goods and services provided on or after the filing date.

Through the RSA and related restructuring transactions, Mobileum is expected to eliminate $529m of prepetition debt and substantially reduce its interest expense burden, positioning the company for sustainable, long-term growth and allowing Mobileum to continue to capitalise on long-term 5G and internet of things tailwinds.

Global operations are expected to continue without interruption during the Chapter 11 cases, including complete continuity of all telecommunications products and services. Mobileum expects to swiftly complete its financial restructuring and emerge from Chapter 11 within 60 days.

“The RSA and filing are important steps forward that will position Mobileum to continue as a leading provider for the telecommunications industry for the long-term,” said Mike Salfity, chief executive of Mobileum. “With a strengthened balance sheet and the committed support of our financial partners, Mobileum will be equipped with the financial flexibility to build for the future and continue driving value for our customers through our suite of category-defining analytics solutions.”

Headquartered in Silicon Valley, Mobileum is a leading provider of telecommunications analytics solutions for roaming, core network, security, risk management, domestic and international connectivity testing and customer intelligence. It has global offices in countries including Germany, Greece, India, Japan, Portugal, Singapore and the United Arab Emirates.

Mr Salfity concluded: “We expect complete continuity during the Chapter 11 and RSA processes, and for our customers to maintain uninterrupted access to Mobileum’s mission critical products and services.”

News: Mobileum goes bankrupt amid PE owners' legal battle

Fisker Inc files for Chapter 11 protection

BY Richard Summerfield

US electric vehicle (EV) start-up Fisker has filed for Chapter 11 bankruptcy protection after talks with an unnamed major car maker on a cash injection ended without a deal. The company will now look to sell assets.

According to the court filing, the company’s operating unit, Fisker Group Inc, filed for Chapter 11 bankruptcy in Delaware, listing estimated assets of $500m to $1bn and liabilities of $100m to $500m. The company has between 200-999 creditors.

Fisker’s future has been the source of speculation in recent months. In February, the company warned about its ability to remain in business after earlier announcing weaker-than-expected earnings and plans to cut 15 percent of its workforce. In March, the company said it had secured $150m in financing from an existing lender, but this was tied to the startup securing investment from the unidentified automaker.

“Fisker has made incredible progress since our founding, bringing the Ocean SUV to market twice as fast as expected in the auto industry and making good on our promises to deliver the most sustainable vehicle in the world,” said a Fisker spokesperson. “We are proud of our achievements, and we have put thousands of Fisker Ocean SUVs in customers’ hands in both North American and Europe. But like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently. After evaluating all options for our business, we determined that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company.”

The bankruptcy filing comes just a year after Fisker delivered its all-electric vehicle, the Ocean SUV, to customers. The company also changed its business model earlier this year. As a result, Fisker was no longer selling directly to customers and instead tried to partner with established dealers. Furthermore, the company recently cut prices on its inventory vehicles after pausing production. Fisker made more than 10,000 vehicles last year, less than a quarter of forecast production, and delivered only around 4700 to customers in the US and Europe.

The EV market has faced significant headwinds in recent years, with manufacturers including Proterra, Lordstown and Electric Last Mile Solutions also filing for bankruptcy due to dwindling cash reserves and fundraising difficulties. Global supply chain issues caused by ongoing economic and geopolitical uncertainty have also disrupted production across the EV space.

News: EV startup Fisker files for bankruptcy, aims to sell assets