Rite Aid nears sweeping creditor deal to avoid liquidation

Rite Aid Corp. is nearing a deal with key bondholders and other creditor groups that will allow the pharmacy chain to avoid a liquidation, according to people with knowledge of the matter.

The deal calls for junior bondholders to take over the struggling pharmacy chain and exit Chapter 11 protection as a going concern, according to the people, who asked not to be identified discussing the private accord. The so-called global settlement would incorporate deals with a committee of tort claimants and its asset-based lenders, the people said.

The proposal is a coup for Rite Aid, which has repeatedly pushed back a key deadline in its bankruptcy as it sought to resolve major barriers to its exit from Chapter 11 protection. It has been closing unprofitable stores in bankruptcy and already sold its pharmacy benefits manager unit, Elixir, to MedImpact Healthcare Systems.

A representative for Rite Aid declined to comment.

The company is due to appear in bankruptcy court at 10 a.m. Tuesday in New Jersey.