Owners of unused gift cards target Borders in bankruptcy court
Two consumers who got stuck with $125 in unused Borders gift cards after the Ann Arbor-based bookstore chain completed the liquidation of its stores in September are trying to organize a class action suit against Borders' bankruptcy estate, according to the Wall Street Journal.
Borders honored gift cards until the virtual end of its liquidation sales in September, but the gift cards are now worthless.
Attorneys for two consumers who filed papers with the U.S. Bankruptcy Court's Southern District of Manhattan are targeting Borders, saying the bookstore chain didn't give proper notice that the gift cards would be worthless after its liquidation. They want to compile a group of angry owners of unused gift cards to gain more heft.
During the final month it was in business, Borders recorded $156.2 million in "other revenue" — which, according to a bankruptcy filing, included the "write-on of all unredeemed gift cards issued prior to" the company's Chapter 11 bankruptcy filing in February.
Many retailers don't treat gift card sales as revenue until they're spent — but in this case, all of Borders' stores are closed and competitor Barnes & Noble, which acquired Borders' intellectual property, isn't accepting Borders gift cards.
In effect, Borders gift cards are now useless, allowing the consultants who now run Borders' bankruptcy estate to record unused gift cards as revenue.
It's unclear whether the lawsuit has much of a chance: The company received approval in December to legally dissolve its estate.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Shelske
Sun, Jan 8, 2012 : 9:10 p.m.
When those signs went up for stor closings, they announced that the rewards ended on a certain date & also stated that gift cards would be valid to a certain date also. Even if this didn't happen, when they saw store closing & read or heard the news that Borders was going out of business, why would they keep them & not use them. Oh yeah, so they would have something else to complain about. It's bad enough that they actually found a lawyer to talk to them about this case let alone that the taxpayers have to pay for them to use our justice system on yet another frivilous lawsuit. So you lost $125, what about all the people working for Borders who lost their jobs & many having to move cross country to find another job. I have never understood why people hold on to gift cards. USE THEM.... That is what they are for. No Sympathy here for any of thos left holdng Borders Gift Cards.
justcurious
Sat, Jan 7, 2012 : 3:31 p.m.
This is a waste of time in my opinion. Any class action suit will generate mere pennies for the members. Not worth postage the notice they eventually send you in the mail.
proudtobeme
Sat, Jan 7, 2012 : 2:32 p.m.
the minute I heard that Borders was going to be closing,I immediately used my gift cards. Seems like common sense to me.
Karen
Sat, Jan 7, 2012 : 2:08 p.m.
Why is this tagged under Food?
Jeff Renner
Sat, Jan 7, 2012 : 4:16 p.m.
Because of lynel's comment above, "If anyone had a Border's gift card and didn't see this coming should eat it."
justcurious
Sat, Jan 7, 2012 : 3:28 p.m.
lol
Gorc
Sat, Jan 7, 2012 : 2:05 p.m.
Scratch my previous question, I just reread the article.
Gorc
Sat, Jan 7, 2012 : 2:02 p.m.
Mr. Bomey - Do you know if the cards still a balance on them? And it's just the two owners of the cards have no where to redeem them, which makes them worthless.
johnnya2
Sat, Jan 7, 2012 : 8:38 a.m.
A gift card is an UNSECURED creditor in a BK filing. The time to make your claim was BEFORE the liquidation. Of course a gift card holder is way down the list in importance. People like the owners of Arborland, and the downtown location are also creditors who will not see a dime from this. If the lawyer thinks there is money from the estate, they are sadly misinformed. It is like suing a dead person. Even if you win, go ahead and try to collect. Good luck on that one. There is no source of revenue. The lawyer is trying to make a name.
grimmk
Sat, Jan 7, 2012 : 4:28 a.m.
Seriously? Unbelievable. People will do anything to make money these days. What a sham. It's GONE. Let it GO. It is THEIR problem for not using the gift certificates. I'm surprised they weren't laughed out of court.
lynel
Sat, Jan 7, 2012 : 2:10 a.m.
If anyone had a Border's gift card and didn't see this coming should eat it.
jns131
Sat, Jan 7, 2012 : 5:21 p.m.
I totally agree. Once we knew this was coming we took ours in and got them cashed for books and other merchandise. I think they also mentioned in one of the news stories to start using them because they will be worthless after they are closed. I hope they come out with nothing or best yet? A Barnes and Noble gift card.
5c0++ H4d13y
Sat, Jan 7, 2012 : 12:35 a.m.
They'll get pennies on the dollar and the lawyers will get a huge payout.
Angry Moderate
Fri, Jan 6, 2012 : 11:40 p.m.
I must have read a dozen stories about Borders' bankruptcy on AnnArbor.com. I feel like a bit of an idiot that the harm to gift card holders never crossed my mind!
Tom Teague
Fri, Jan 6, 2012 : 10:30 p.m.
I was calling friends and family a year ago urging them to quickly use any Borders gift cards that they might have received over the years. I'm sure the plaintiff's attorneys have a completely reasonable and believable explanation about how their clients were damaged and why they should be designated as a class for purposes of this suit. Writing that last sentence reminds me to add this: The online world desperately needs a globally accepted emoticon for expressing sarcasm.