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As the future of Rite Aid’s Chapter 11 remains uncertain, its troubles continue to mount with CVS filing a motion to enforce, accusing the debtors of failing “to provide insurance coverage for druggist liability,” in breach of the APA and, notably, suggesting that “holdback from CVS’s final closing payment to the Debtors may be the only way CVS can be adequately compensated for the Debtors’ breach.”

At the disclosure statement hearing, after the debtors admitted they were unsure of whether they would be able to confirm a Chapter 11 plan, the court granted their request to dual track a plan process and a structured dismissal process but required that the debtors file a notice indicating which exit option they will pursue by 26 September.

However, with the docket reflecting that that deadline was extended to 30 September, and then further extended to “a date to be determined,” and no other indication of where the case currently stands, the uncertainty swirling around this Chapter 11 remains.

In its motion to enforce, CVS asserts that the APA it entered into with the debtors to acquire certain assets relating to the debtors’ retail locations in the Pacific Northwest region provides that the debtors shall either “maintain, at [their] own expense and for a period of three (3) years following [30 September 2025]… [their] existing insurance coverage with respect to events relating to druggist liability occurring prior to [30 September 2025],” or alternatively, “purchase tail coverage for a period of three (3) years after [30 September 2025] covering any and all such occurrences prior to each Closing, and which are not reported until after such [30 September 2025].”

CVS explains that while the sale order could help CVS to avoid direct liability for acts occurring before 30 September, because it hired approximately 300 pharmacists, and 500 pharmacy technicians that formerly worked for Rite Aid at the acquired stores, the debtors must maintain insurance coverage “to protect the interests of the Debtors’ former employees and not have them ruined financially, and to protect CVS’s operations going forward, the Debtors must maintain insurance coverage for acts that may have occurred while such employees worked for the Debtors.”

Along with the motion, CVS filed the declaration of its counsel — Roger Strode of Foley & Lardner, attesting to the facts alleged in the motion and attaching related documentary evidence. Notably, CVS alleges that in June 2025, the debtors acknowledged their insurance obligation “but indicated to CVS that they would not comply with it and that they intended to breach the [APA].” CVS states that in July 2025, CVS contacted debtors’ counsel regarding this issue and “sought assurances” that the debtors “intended to comply with their obligations… to maintain or procure and maintain the required druggist liability coverage.” CVS alleges that, in response, debtors’ counsel again acknowledged the debtors’ insurance obligations, confirmed the obligations began on 30 September 2025, and “assured CVS’s counsel that ‘[t]here is no current or anticipatory breach of this provision of the APA.’”

CVS states that when it subsequently requested that the debtors “provide CVS with reasonable evidence of such compliance including, for example, communication from an insurer indicating that such coverage has been bound or, in the alternative, a copy of such policy coverage,” debtors’ counsel responded that “Rite Aid is still considering its options with respect to,” the insurance obligation.

CVS further alleges that it was “led to believe” that the debtors had gotten a quote for a three-year tail policy from Lloyds of London and on 23 September, it requested a “as soon as possible… evidence of the tail insurance coverage through either a certificate of insurance showing the terms and conditions or the insurance binder.” However, CVS reports that the debtors have not provided any evidence of compliance with the insurance obligation. Additionally, CVS represents that communication it received from debtors’ counsel in October “admitted that the Debtors have not renewed their existing insurance, nor have they purchased tail insurance.”

The motion to enforce has been set for hearing on 10 October at 10am ET.

The Chapter 11 docket can be found on the 9fin platform.