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Your Gift Cards Quickly from Companies Filing for Bankruptcy-Truth!
Summary of the eRumor: A list of U.S. companies that are going out of
business---and a warning that you should use any gift cards from these
The Truth: This eRumor began circulating in April, 2008.
It is true that some of these companies are facing tough times
financially, but not all of them are going out of business.
Bankruptcy sometimes means they are closing their doors. But
sometimes it also means that they are reorganizing and intend to continue.
Sometimes other companies may purchase them out of bankruptcy.
The Wall Street Journal said on April 28, 2008, that bankruptcy laws do
not require companies to redeem gift certificates so a lot of consumers
might end up with worthless cards. Not all the struggling companies
are handling gift certificates the same way.
Let's go through the list:
Hollywood Video Hollywood Video's parent company, Movie Gallery, announced plans at
the end of 2007 to reorganize through bankruptcy. As of this writing
Hollywood Video is still operating although a lot of stores have been
closed as a part of the reorganization.
Levitz Furniture Levitz is currently in the process of liquidating assets and the only
advice the company has had for holders of gift cards is to file a claim in
bankruptcy court. Consumers are usually the last in line when bills
are being paid, however.
Sharper Image Sharper Image filed bankruptcy in February, 2008, and for a while it
stopped accepting gift cards. It later began accepting them again
but customers needed to buy something worth double the card's value and
were required to use the full amount of the card.
Performance Team Freight This company is not going bankrupt, does not do retail sales, and does
not issue gift cards! We don't know why it was included in this
list. The company describes itself as providing third party
logistics services to retailers and their vendors.
Linens 'n Things As of this writing, Linen's 'n Things has not filed for bankruptcy but
there has been speculation about it because the company deferred an
interest payment to lenders.
Circuit City The company has not filed for bankruptcy. There was talk of
selling the company to Blockbuster, in which case gift cards would still
The bottom line is that if you hear of a company going bankrupt, contact
that company to find out the status of your gift cards.
A real example of the eRumor as it has
appeared on the Internet:
The following companies just filed for Bankruptcy:
Performance Team Freight
Linens n Things
If you have gift cards from the above list use them ASAP, they will not be
valid for much longer.
**actually Levitz has already closed its doors....
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