Many people find it easy and convenient to give their friends and family gift cards to retail establishments so that the celebrant can choose their own particular gift at a store or through the retailer’s Internet website. But what happens to your gift card when a retailer that has taken in large sums of money through the selling of these gift cards, files for bankruptcy protection and determines to reorganize or to cease to exist. The answer is it depends. In some cases companies have eventually reneged on these gift card and left tens of thousands of gift card holders with worthless cards despite the fact that the retailer took in millions selling them. Examples of familiar companies whose gift cards are now worthless, and against whom consumers no longer have any recourse abound: Blockbuster, Circuit City and Linen’s and Things are just a few examples where the value of any unredeemed gift cards has been forever lost.
Bankruptcy courts in which these failed retailers have filed generally determine a date after which the gift cards will no longer be able to be used. For instance, Borders, which announced just over one week ago that a deal by the parent company of the Book-of-the-Month-Club to purchase Borders assets had been scrapped, is now hurriedly selling off all books and other merchandise and closing all stores at dates to be determined in the coming days and weeks, once the inventory is sold. Borders stores that have not yet closed are accepting the gift cards, and so too is Borders.com. If you are holding an unused Borders gift card, we strongly suggest that you use it today or risk losing its value.
If you are holding unused gift cards of a retailer that has filed for reorganization, we may be able to help you recoup some or all of the value of that gift card if the bankruptcy court determines that the surviving company can eventually stop honoring them. If you are holding a gift card to the plus-size clothing seller Deb Shops or the gourmet food seller, Harry & David, please contact us to discuss your legal options.