Rite Aid Creditors Decry Risks of $1.9 Billion Bankruptcy Loan

Rite Aid’s proposal to continue borrowing up to $1.9 billion from its lenders while in bankruptcy risks leaving unpaid some $600 million worth of critical business support, company creditors said.

Rite Aid vendors, landlords and other unsecured creditors urged the US Bankruptcy Court for the District of New Jersey on Wednesday to reject the pharmacy chain’s request for final approval of a Chapter 11 financing package—or debtor-in-possession loan—that would elevate the repayment priority for pre-bankruptcy funded debt.

The company’s plan to sell its assets is unlikely to yield enough value to pay back senior creditors, putting vendors and workers at ...