Have you ever thought what to do with a “toxic” gift card? You know, those gift cards from companies that could go bankrupt?
Lots of people see gift cards as the perfect present, but what if those gift cards belong to the troubled retailers that faced closings in 2008? It’s estimated that more than $75 million from store and restaurant gift cards could be lost this year. For Orange County residents, home to South Coast Plaza in Costa Mesa, the Mission Viejo Mall, Laguna Hills mall, and many other shopping centers, this is something to be worried about.
Last Christmas, shoppers spent approximately $26.3 millions on gift cards at retailers. Big retailers, such as Sharper Image, Bombay Co. and most recently Circuit City, have filed for bankruptcy protection. The Bankruptcy Code considers unused gift cards as unsecured debt, which means that the company would not be forced to honor them, no matter if the amount goes to $20 million as in Sharper’s case.
Although Sharper Image first decided not to honor the gift cards, the company later proposed to accept them if the clients spent twice the value of the gift card on a single transaction. So, in order to get your Christmas present from Grandma, you would need to spend twice its value. Talking about not-so-good deals.
In cases in which a company is sold or reorganized, and continues its operations, most owners will get authority from the Bankruptcy Court to honor the cards, but in outright liquidations, in which stores are closed, the cards would be worthless. In that case, you could use your long expected gift card as a ruler, or as a chewing gum scratching tool.
What are you going to give your picky relatives this Holiday season? In case of doubt, just remember that good old cash never expires and it’s always well received.
