Yahoo Finance Rite Aid Fights $200 Million Bill After MedImpact Buys Elixir
(Bloomberg) -- Rite Aid Corp. and MedImpact Healthcare Systems Inc. are fighting over which company is responsible for more than $200 million in extra costs connected with an acquisition, a fresh hurdle for the pharmacy company as it attempts to forge a path out of bankruptcy.
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The companies completed a trial Friday in New Jersey bankruptcy court over whether MedImpact is on the hook for paying the additional liabilities on top of $575 million it paid to acquire pharmacy benefit manager Elixir from Rite Aid. Some of the expenses include millions of dollars in unpaid reimbursements owed to CVS Health Corp., Walgreens Boots Alliance Inc. and Walmart Inc., according to court documents.
Rite Aid and its creditors would be responsible for the extra cost if Judge Michael Kaplan sides with MedImpact. The judge is scheduled to rule on the dispute Monday, days before Rite Aid plans to seek approval on its Chapter 11 exit plan.
Rite Aid lawyer Mark McKane said Friday that MedImpact assumed the liabilities when it acquired Elixir earlier this year but is now “trying to re-trade the deal.”
MedImpact has said that the extra expenses, like the amounts owed to other pharmacies, are excluded by the Elixir sale agreement and that the company negotiated price caps and other protections because of “the unreliable nature of the financial information provided by Sellers.”
Bloomberg Intelligence Litigation Analyst Negisa Balluku said in a note that Rite Aid is likely to win the dispute.
Rite Aid filed for bankruptcy in October and said last month that it was continuing to work with banks and a key bondholder group on a rescue deal that will allow it to continue operating after exiting court protection. The company has closed roughly a quarter of its locations while in Chapter 11.
The case is Rite Aid Corp., 23-18993, US Bankruptcy Court for the District of New Jersey.
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