Holders of Unredeemed Gift Cards Denied Bankpruptcy Priority

For some time now, the brick and mortar side of the retail industry has been in financial distress. In 2015 and 2016 alone, brand-name ­companies such as Sports Authority, RadioShack, Aéropostale, American Apparel, Eastern Mountain Sports and City Sports sought bankruptcy protection. A common question in these cases is how to treat holders of unredeemed gift cards. Are they near the back of the line with other general unsecured creditors, or are they entitled to “priority” payment status under the Bankruptcy Code?

7 minute read November 01, 2016 at 12:02 AM
By
Francis J. Lawall and Francis A. Weber
Holders of Unredeemed Gift Cards Denied Bankpruptcy Priority

For some time now, the brick and mortar side of the retail industry has been in financial distress. In 2015 and 2016 alone, brand-name ­companies such as Sports Authority, RadioShack, Aéropostale, American Apparel, Eastern Mountain Sports and City Sports sought bankruptcy protection.

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