Stores that are going out of business or have recently filed for bankruptcy and what that means for their gift cards. Gift cards to use ASAP in 2022.
Post updated 2/17/2022
The Bankruptcy Gift Card Conundrum

What Happens to Gift Cards When a Store Files for Bankruptcy?
When a store or restaurant files Chapter 11, the business goes through a reorganization process where they must develop a plan to repay creditors and, if possible, return to profitability. The plan, and each action taken within the plan, must be approved by the bankruptcy court covering the case. Although the hope is that the business will be saved, other scenarios can occur such as shutting the doors completely, selling the company as a whole or selling parts of the company to a new owner.
The problem for consumers is that when a company is in this type of financial trouble, outstanding gift cards become just as vulnerable as the business itself. In fact, the cards are often deemed immediately useless even though stores are open and merchandise remains on the shelves. While some companies ask the courts for permission to continue accepting gift cards during bankruptcy proceedings, some don’t and others only ask for permission to accept the cards for a limited period of time.
Consumers who miss the opportunity to use their gift cards before decisions are made often find their cards are worthless or they must file claims in order to join the list of creditors wanting their money back.
READ: More on What To Do with Gift Cards to Stores in Bankruptcy.
Gift Cards in Critical Condition
I always advise using gift cards immediately because the longer you hold onto a gift card, the higher the likelihood that you’ll lose the card or forget to use it. When a store is in financial trouble, the urgency is even greater. Below is a list of stores currently in Chapter 11.
Please note. I am not a lawyer and cannot offer legal advice. I am simply reporting what I learn about gift cards impacted by bankruptcy.
Merchant | Gift Card Impact |
---|---|
Sears |
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Gift Card Girlfriend Note: A company that appears on the Watchlist is currently in or has recently filed for Chapter 11 bankruptcy protection. When a store emerges from bankruptcy and continues to accept previously-issued gift cards, the store will be removed from the Watchlist. If the store closes or restructures but no longer accepts previously issued gift cards, the company will be moved to the Gift Card Graveyard when the bankruptcy case is closed. This list is updated frequently as bankruptcy news is received. If I have missed anything, please leave a comment below.
RIP: The Gift Card Graveyard
photo credit: Borders Book Bankruptcy via photopin(license)
When a merchant files for Chapter 11 Bankruptcy, there is a possibility that the store will recover. But there is also the possibility that the store will be shutdown or that a new owner will take over. In either of the latter cases, outstanding gift cards may suffer an early demise, leaving gift card holders to mourn the loss of millions of dollars. Below is a list of gift cards that are defunct as a result of restructuring.
Merchant | Timeline of Death |
---|---|
Modell’s |
|
Barneys |
|
Charming Charlie |
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Dressbarn |
|
Charlotte Russe |
|
Munchery |
|
Shopko |
|
Payless Shoe Store |
|
Gymboree |
|
Brookstone |
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Toys R Us |
|
Family Christian Stores |
|
Wet Seal |
|
Gordmans Stores |
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Gander Mountain |
|
Vanity |
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American Apparel |
|
The Limited |
Per an email from customer service on 3/14/2018, “Please note that Limited Stores, LLC, (“Old Limited”) filed for protection under Chapter 11 of the United States Bankruptcy Code in January 2017. As part of bankruptcy proceedings, The Limited LLC (“New Limited”) acquired The Limited brand name and intellectual property. New Limited has no affiliation or association with Old Limited and, unfortunately, cannot accept gift cards, credit cards or any returns of product sold by Old Limited.” |
GolfSmith |
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Hastings |
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Sports Chalet |
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Sports Authority |
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Hancock Fabrics |
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City Sports |
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A&P Supermarkets |
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Dots, Simply Fashion Stores |
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RadioShack |
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C. Wonder |
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Anna’s Linens |
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Cache |
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SkyMall |
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dElia’s (dELiA*s) |
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Deb Stores |
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Coldwater Creek |
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Borders |
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Linens ‘n Things |
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The Sharper Image |
|
Tips on Filing a Gift Card Claim
If you decide to file a claim for a gift card to a store that is in bankruptcy, the most important thing to remember is that you are filing an UNSECURED CLAIM. Knowing which type of creditor you are in bankruptcy is important.
In simple terms, you are an unsecured creditor in a store’s bankruptcy case because the store did not give you any collateral (other than a piece of plastic or possibly a digital egift card) when you bought the gift card.
Although there is often a claim deadline in which you should file a gift card claim for a store in bankruptcy, my advice is to file the claim even after the deadline has passed and to hold onto the gift card (or a picture of the front and back of the card) even after you have filed the claim. I offer this advice because I called a claim processor once who told me that you should always file a claim. Although it is unlikely you will get any money back from the gift card, if there is money left after the other claims have been processed, there is a small possibility that you will be reimbursed. I will take that small possibility over no possibility if you never file the claim.
Remember: Your gift card claim of $50 or so is a small drop compared to a huge bucket of million-dollar debts owed by the company going under so please do not file a claim expecting to get your money back quickly or at all. But like I said, to me it is still worth doing.
Gift Card Holders Need Protection
I normally only see the good in gift cards, but this situation has caught my attention. I understand shutting down stores. I understand that gift cards can’t be used once a store goes out of business. But I don’t understand why outstanding gift cards can’t be used when a store continues to operate–even if that operation is under the direction of a liquidation company. As long as the doors are open and there is inventory to buy, consumers who have already given the store money in exchange for merchandise should be allowed to collect. (Since statistics consistently show that shoppers with gift cards overspend the value of their gift cards, the liquidation company has the opportunity to move more merchandise by accepting outstanding cards than not.) If the business does eventually close, I believe the courts should treat gift card holders as a group of creditors who are collectively owed several million dollars versus a bunch of individual creditors owed a small sum. (Radio Shack is said to have $44 million in outstanding gift cards.) While I’m not ready to go “Legally Blonde” on this issue, I do think some type of reform is in order. Anybody else?
If you know of other gift cards in jeopardy, add your comments below or reach out to me on Twitter (@GCGirlfriend).
Happy Gift Carding!
~Shelley Hunter, Gift Card Girlfriend