Rite Aid Changes Legal Leadership Again as Bankruptcy Exit Nears

Rite Aid Corp.’s chief legal officer Thomas Sabatino Jr. has left the bankrupt retailer after roughly a year in the role and after the company recently won approval for a corporate restructuring plan.

The company disclosed in an Aug. 19 securities filing that Christin Bassett is now its acting general counsel and corporate secretary. Bassett, a former Reed Smith partner who was previously named interim law head following the departure last year of former Rite Aid legal chief Paul Gilbert, was elevated again in July, according to her LinkedIn profile and the pharmacy chain’s website.

Sabatino’s name was removed from the management page on Rite Aid’s website that same month and replaced by Bassett, who was hired by the company as its head of litigation in 2021 and subsequently promoted to deputy general counsel. Bassett, Sabatino, and Rite Aid didn’t respond to requests for comment.

Sabatino joined Rite Aid in June 2023 after a long career in top legal jobs at leading US public companies such as Aetna Inc., Baxter International Inc., Hertz Global Holdings Inc., Schering-Plough Corp., Tenneco Inc., United Airlines Inc., and Walgreens Co. He and Bassett worked together at Aetna, which was sold for $68 billion in 2019 to Rite Aid rival CVS Health Corp.

Rite Aid noted Sabatino’s four decades of legal expertise in recruiting him last year to lead its legal team ahead of a Chapter 11 filing by the drugstore giant in October 2023. Sabatino’s biography on the website for the International Institute for Conflict Prevention and Resolution, a nonprofit on whose board he serves, now lists him as a retired legal chief who most recently worked at Rite Aid.

The Philadelphia-based company has overhauled its in-house legal ranks and outside counsel roster in recent years, cutting ties to two Big Law firms connected to Rite Aid executives. Rite Aid is also now closing more than 500 stores and recently raised $391 million from the sale of its Elixir pharmacy benefit manager business as the company reorganizes its operations.

Rite Aid, which retained Kirkland & Ellis as lead bankruptcy counsel as it sought to avoid mounting liabilities linked to opioid prescriptions, dodged liquidation in late June by finalizing a plan to shed $2 billion in debt and award control of the company to key creditors. That same month Rite Aid experienced a data breach affecting 2.2 million customers, leading it to hire Holland & Knight to handle related litigation that was consolidated this week in Pennsylvania.

In June, some Rite Aid lenders scrutinized a $20 million payment due to chief executive officer and restructuring officer Jeffrey Stein, who already makes $300,000 per month in consulting fees and stands to receive an additional “success fee” when the company emerges from insolvency.

Stein and Kirkland restructuring partners Edward Sassower and Joshua Sussberg didn’t respond to comment requests. Nor did Michael Sirota, co-managing partner of Cole Schotz, which is serving as bankruptcy co-counsel to Rite Aid.

Bankruptcy Bills

Rite Aid’s bankruptcy docket in Trenton, New Jersey, shows that at least 10 law firms—some of whom have been urged by creditors to cut their legal bills—have been busy advising various parties in the case during the last 10 months. Kirkland and Cole Schotz have respectively earned almost $38.4 million and $869,000 as bankruptcy co-counsel to Rite Aid, according to court filings.

Wilson Sonsini Goodrich & Rosati and Kobre & Kim, which are advising Rite Aid directors, have been paid roughly $1.2 million apiece. Milbank’s tab for Rite Aid affiliate Thrifty Payless Inc. stands at $412,600, while Katten Muchin Rosenman has earned about $2.7 million as counsel to subsidiary Hunter Lane LLC.

Kramer Levin Naftalis & Frankel and Kelley Drye & Warren received nearly $10.2 million and $1.4 million, respectively, as co-counsel to an official committee of unsecured creditors. Akin Gump Strauss Hauer & Feld, counsel to an official committee of tort claimants, has earned more than $12.1 million. Moorestown, New Jersey-based Sherman, Silverstein, Kohl, Rose & Podolsky has received almost $253,000 as local counsel to that committee.