Below is our initial take on recent bankruptcy-related developments:
Rite Aid bankruptcy update: report says pharmacy chain may be facing insolvency as businesses close | Fast Company
Having previously filed for bankruptcy in 2023, Rite Aid is now preparing to file a second bankruptcy claim wherein it will “sell itself in pieces,” according to a recent Bloomberg report. The proceedings would begin a mere year after the pharmacy chain emerged from its previous Chapter 11.
S&K Take: The drumbeats around a Rite Aid chapter 22 are getting louder. Recently a report stated that a $2.5 bn slice of the Rite Aid ABL was trading around 66, which is not a good sign. The most recent Bloomberg report notes that Guggenheim is out seeking to source a DIP, although if the ABL isn’t covered the priming is going to hurt on a dollar-for-dollar basis. Sounds like the plan is essentially a liquidation, with some locations sold wholesale and others simply closed (as the article notes many locations are already in the process of closing). Another example of a very tough (prospective) bankruptcy where options are not robust.
23andMe bankruptcy sale may need national security review | Reuters
Bankrupt genetic test company 23andMe is facing a potential snag in its search for a buyer: The U.S. Committee on Foreign Investment in the United States stated in a Tuesday court filing that it may need to review any sale that sends U.S. customers’ data to a foreign buyer.
S&K Take: As expected, privacy issues have been at the forefront of the 23andMe bankruptcy. Last week, the US House Oversight Committee asked former board member Anne Wojcicki to testify regarding the vulnerability of personal data on the platform (odd since she is no longer involved with the company). Now the US government has buzzed the Debtors’ tower in the bankruptcy, filing a notice letting the Debtors know that any sale to a foreign entity will be subject to CFIUS scrutiny. CFIUS recently put the Nippon Steel/US Steel merger under the microscope before Biden killed the deal. Makes you think that the Debtors would favor a domestic purchaser. We should get some idea of what is coming down the pike with stalking horse bids due imminently.
Bankruptcy inquiries hit Pandemic-era highs, warning of summer surge | Businesswire
LegalShield reported last week that first-quarter 2025 bankruptcy inquiries have ballooned to their highest levels since early 2020. The report indicates that the arrival of summer may bring with it an influx of filings.
S&K Take: Interesting report, albeit based on consumer bankruptcy “inquiries.” Consumers have more debt than at any point in history, with $1.21 trillion in credit card debt. Delinquencies are also tracking towards record highs. You’d think this augurs for a more robust corporate bankruptcy summer as well. It seems to be trending in that direction, at least anecdotally. You can feel the sentiment. Restructuring professionals concurrently mourn the loss of their summers and rejoice at the prospect of cases on the horizon.
