Based on other stores which have filed for bankruptcy in recent years, including Sharper Image, gift cards have not always been honored. In fact, gifts cards can - and have- been suspended during Chapter 11 bankruptcies.
Sharper Image did everything from suspending use of gift cards to forcing customers to purchase items worth double the amount of the cards (far from a gift). Anchor Blue, a California clothing retailer, allowed use of gift cards only through Jan. 28, 2011.
Here are five more reasons why you should dash to your nearest Borders bookstore, use those gift cards now, and avoid future surprises:
1. Store shelves may not be restocked - or stocked only with limited items.
Depending on how the Borders Chapter 11 bankruptcy proceeds, you may find slim pickings if you wait to use those gift cards. With the future of the stores in question, Borders could liquidate all assets. Gift cards can be classified as assets during some bankruptcies, with the profits going to creditors, making your card worthless for purchases.
2. Contrary to your expectations, you may not really "own" those cards or be able to use them in the near future.
As noted above, this happened with Sharper Image, leaving consumers in the lurch.
True, there is no predicting how gift cards will be handled at Borders - at least for now. But some are urging Borders gift card holders to redeem them quickly rather than wait to see how the bankruptcy is handled.
3. Gift cards may be seized by creditors during a Chapter 11 bankruptcy - and you won't necessarily know when this will occur.
You may believe that as long as the stores are open, you have the right to use your Borders gift cards. But they may be claimed by creditors or frozen before you have a chance to cash them in, even when stores are still open. Again, this has happened before.
4. After redeeming your cards, use cash for future purchases at Borders.
Based on the often confusing details of Chapter 11 bankruptcies, hanging onto gift cards could be risky. As long as Borders stores are open and you find items you want to purchase, go with cash and avoid potential pitfalls of gift cards.
5. For now, don't purchase additional Borders gift cards.
At the very least, wait to see how Borders reorganizes during bankruptcy proceedings.
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