Drug Fair files Ch. 11, to sell 32 stores to Walgreens

Somerset, N.J. Drug Fair Group and its parent company CDI Group Wednesday announced that they filed voluntary petitions for Chapter 11 bankruptcy protection. The company, which operates under the Drug Fair and Cost Cutter banners, said it will continue to operate through bankruptcy proceedings.

In connection with the filing, the chain said it has entered into an agreement to sell substantially all assets associated with 32 of its 50 drug stores to Walgreens. The companies did not disclose terms of the deal. The proposed transaction remains subject to bankruptcy court approval.

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

Drug Fair said it has arranged a four-month secured debtor-in-possession financing facility of $40 million that it would use to fund operations.