Drug Fair Group files for bankruptcy protection

Drug Fair Group and its parent company CDI Group have filed voluntary petitions for reorganization under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the District of Delaware.

In connection with the Chapter 11 filing, Drug Fair entered into an agreement with a subsidiary of Walgreens to sell substantially all of its assets associated with 32 of its stores to Walgreens. The proposed transaction remains subject to the marketing requirements of the Bankruptcy Code and the approval of the bankruptcy court.

Prior to its Chapter 11 filing, Drug Fair sold various assets at 13 locations to third parties, including Walgreens.

In connection with the Chapter 11 filing, Drug Fair said that it has arranged a four-month secured debtor-in-possession financing facility (the ‘DIP financing’) in the amount of $40 million. If approved by the court, proceeds from the DIP financing will be used by Drug Fair to fund its operations during the Chapter 11 proceedings and should enable it to continue to satisfy its obligations associated with its remaining operations, including payment of employee wages and benefits and post-petition obligations to vendors.

Tim Boates, chief restructuring officer of Drug Fair Group, said: After exploring alternatives following a thorough consultation with its legal and financial advisors, Drug Fair’s board of directors determined that an orderly sale of the company’s assets through a Chapter 11 process, together with those assets sold prior to the Chapter 11 filing, would be the most prudent and effective way to maximize value for Drug Fair’s stakeholders.