Yahoo Finance Judge Rules Against MedImpact In $200M Rite Aid Debt Dispute
MedImpact’s attempt to recoup approximately $200 million following its purchase of Rite Aid Corp’s (OTC:RADCQ) pharmacy benefits unit has failed.
U.S. Bankruptcy Judge Michael Kaplan ruled that MedImpact assumed Elixir’s debts when it acquired the company.
In a hearing, Judge Kaplan highlighted that MedImpact was aware of Elixir’s negative cash balance, which stood at around $200 million.
This deficit was mainly due to reimbursement payments owed to pharmacies, including CVS Health Inc (NYSE:CVS) and Walgreens Boots Alliance Inc (NASDAQ:WBA).
Previously, Kaplan had approved MedImpact’s $575 million acquisition of Elixir, confirming that the sale agreement included the transfer of Elixir’s debts to MedImpact.
This decision is crucial as it underscores the financial obligations that MedImpact inherited with the purchase.
Rite Aid, a major U.S. pharmacy retailer, filed for bankruptcy in October, citing substantial debt, declining revenue, increased competition, and litigation over its involvement in the U.S. opioid crisis as primary factors.
The dispute with MedImpact, a pharmacy benefit manager, posed a significant threat to Rite Aid’s overall restructuring plan, which awaits final court approval on Thursday, Reuters highlighted.
Judge Kaplan remarked that Rite Aid was in no position to cover Elixir’s old debts, given its financial struggles and efforts to raise cash while reducing liabilities.
“It is no secret that money in this case is tight, and there is little wiggle room, let alone over $200 million of wiggle room,” Kaplan stated.
Rite Aid’s bankruptcy plan aims to reduce its debt by $2 billion and allocate $47.5 million to junior creditors.
These creditors include individuals and local governments who have sued Rite Aid for allegedly ignoring red flags and illegally filling prescriptions for addictive opioid pain medication.
In October 2023, Walgreens Boots Alliance (NASDAQ:WBA) consented to a settlement of $192.5 million following allegations that some of the company’s executives provided misleading information concerning its 2015 attempt to purchase Rite Aid.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Wikimedia Commons
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This article Judge Rules Against MedImpact In $200M Rite Aid Debt Dispute originally appeared on Benzinga.com
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