Have you ever been given a gift card, and held onto it too long? When you went to use it, you found the company had shut down?
What Happens to Gift Cards When a Store Files for Bankruptcy?
When a store or restaurant files bankruptcy via a Chapter 11 filing, the business goes through a reorganization process. They have to develop a plan to pay back creditors and, try to return to profitability.
A judge oversees the process through the bankruptcy court. The hope is that the business will be saved and keep growing, but many times the company is sold to a new owner or divisions of the company are sold off or the company is shut down completely.
The problem for consumers is that when a company is in the midst of reorganization outstanding gift cards become a liability and may be written off.
Many times, gift cards are deemed immediately worthless even though the business has stores that are open and merchandise that remains on the shelves.
While some companies ask the courts for permission to continue accepting gift cards during bankruptcy, 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.
Be Informed About Companies that Are in Bankruptcy or Closed
Gift cards are a convenient way to give to others (especially for Christmas and Birthdays), but are they the most economical way to give?
According to industry estimates over 27 percent of gift cards that sold issued are never redeemed. And that number skyrockets every time there is an economic downturn and stores close their doors.
If you are holding gift cards in any of the following companies — get out and use them. Do your Christmas shopping by using the remaining balance on gift cards you currently have. But think twice before you buy any gift cards as gifts — especially in companies on this list.
On the other hand, if you are looking to pick up some highly discounted presents, you might want to shop at these stores before their doors are shut forever.
Stores that closed locations or went out of business in 2020 & 2021
- 24 hour Fitness: 130 stores (bankruptcy)
- Aldo: 200 stores (bankruptcy)
- Ann Taylor, Loft, and Lane Bryant: In July 2020, the parent company, Ascena Retail Group, which has 2,800 stores, filed for bankruptcy.
- Ascena Retail Group: 1623 Stores (bankruptcy)
- BCBG:120 stores (bankruptcy)
- Bed Bath & Beyond – In 2020 BB&B sales plummeted 49 percent in the first quarter, though online sales increase by 82 percent. It wasn’t enough to save the approximately 1,000 stores in the chain, and, in July 2020, the company announced that about 200 stores would close over the next two years.
- Catherines: 320 (bankruptcy)
- Century 21: 13 stores (bankruptcy)
- Chico’s – Due to the pandemic they decided to close 250 stores out of 1,400 during the next three years.
- Chuck E Cheese: 54 U.S. stores (bankruptcy)
- Coldwater Creek – Founded in 1980, this catalog retailer eventually opened many retail stores. Was purchased by another firm, in 2017 and started to grow. They didn’t attract younger shoppers and in 2020 the company closed its remaining 13 stores.
- Destination Maternity: 90 stores (bankruptcy)
- Earth Food: 40 stores (bankruptcy)
- Forever 21: 207 stores(bankruptcy)
- Francesca: 234 stores (bankruptcy)
- Frys Electronics – After nearly 36 years in business Fry’s Electronics made the difficult decision to shut down its operations and close its business permanently as of February 2021. They had 31 stores located in 9 states.
- Furla: 14 (bankruptcy)
- GNC – Founded in 1935 GNC grew through the decades as more Americans began to embrace the idea of good nutrition. Filed for Chapter 11 bankruptcy in June 2020.
- G Straw Raw: 57 stores (bankruptcy)
- H&M – The 2000 store stong brand announced in late 2020, that it would close almost 200 stores by year’s end and another 350 in 2021. The company pledged to put more effort into developing online shopping options.
- Heritage Brands: 152 Outlet stores (bankruptcy)
- J. Crew: 67 stores (bankruptcy)
- JCPenney – In May 2020, JC Penney announced it was filing Chapter 11 bankruptcy. Subsequently, they closed about 200 of its 850 stores permanently. By the end of 2020, the company emerged from bankruptcy as a private company.
- Kmart – Kmart acquired Sears in 2005, which really hurt them. Then in 2019 a different company acquired both Sears and Kmart, but they couldn’t turn things around. New closures were announced to begin in December 2020. Only about 30 Kmarts remain.
- Le Pain Quotidien: 63 stores (bankruptcy)
- LK Bennett: 5 stores (bankruptcy)
- Lord & Taylor – The company filed for bankruptcy in 2020 and planned to reopen some of its stores, then said it would close the remaining 38 stores. They may emerge as an online-only platform, but it hadn’t appeared by early 2021.
- Men’s Wearhouse – Due to the decline in events in 2020, in August Tailored Brands (Jos. A. Banks & Men’s Wearhouse) filed bankruptcy and announced plans to close up to 500 of its almost 1500 retail stores permanently.
- Modell’s Sporting Goods: 153 stores (bankruptcy)
- Muji USA : 5 stores (estimated) (bankruptcy)
- Neiman Marcus (Last Call): 22 stores + 14 main stores(bankruptcy)
- New York & Co: 378 stores (bankruptcy)
- Papyrus: 254 stores (bankruptcy)
- Pier 1 Imports – In February 2020, the company filed for Chapter 11 bankruptcy, transitioning to an online presence for 2021.
- Pizza Hut: 300 Stores (bankruptcy)
- Roots USA: (bankruptcy) 7 stores
- RTW – Retail Winds – 378 stores (bankruptcies)
- Sears – The company filed for bankruptcy in 2018, closed hundreds of stores. They tried to re-invent themselves, but 2020 brought even more problems as the stores were forced to close during the shutdown.
- Signet Jewelers (Kay, Zales, Jared) – About 150 stores across the company’s various brands were not re-opened after the mid-March closures, and at least 150 more stores were closed by February 2021. They are focusing on online shopping.
- Stage Stores: 738 stores (liquidating)
- Stein Mart – Stein Mart was struggling against much larger off-price competitors such as TJ Maxx. By August 2020, they announced they would be closing all 279 stores across 30 states permanently.
- Sur la Table: 51 stores (bankruptcy)
- Tailored Brands: 500 stores (bankruptcy)
- The Children’s Place – The company closed 200 stores in 2020 and plans on another 100 to close in 2021. They’ll focus their core business online.
- The Paper Store: 86 stores (bankruptcy)
- Tuesday Morning – The company filed for bankruptcy in May 2020, closing approximately 230 of its 700 stores.
- Victoria’s Secret – In May 2020 Victoria’s Secret announced it would close approximately 250 stores out of more than 1000 in the U.S. They are expected to close more in 2021 and 2022.
There is a list being circulated of store closings that has inaccurate or outdated information. The following information appears on Snopes.com website.
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Do You Remember These Stores that Closed in 2008?
CompUSA chain of consumer electronics stores was sold to the Gordon Brothers Group restructuring firm in December 2007, and most of its 103 outlets were subsequently closed. In January 2008 many of the remaining assets and the CompUSA brand were sold to Systemax, Inc. which currently operates 23 CompUSA stores in Florida, Illinois, North Carolina and Puerto Rico, as well as an online store, CompUSA.com. (CompUSA continues to accept gift cards.)
Dillard’s department store chain closed 20 outlets in 2008 and said it expects more store closures in 2009.
Disney Store chain was reacquired by the Walt Disney Co in March 2008; Disney has since closed 98 of its 322 North American stores.
Eddie Bauer chain of casual apparels stores shut down 27 outlets in the first quarter of 2008 and planned to close a few more stores by the end of the year.
Ethan Allen chain of home furnishings stores closed 12 retail design centers and two service centers in 2008.
Foot Locker chain of shoe stores chain closed 274 outlets (out of more than 3,700) in 2007 and another 60 in the first quarter of 2008, with more such closures likely.
Gap chain of clothiers, whose brands include Old Navy and Banana Republic, is closing 85 of its 2,677 stores (most of them branded Gap outlets) but is still opening new stores.
Home Depot chain of home improvements stores announced in May 2008 that it would be closing 15 underperforming outlets.
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KB Toys chain of retail toy stores entered Chapter 11 bankruptcy protection in January 2004 and at that time announced plans to close 375 of its outlets. It emerged from Chapter 11 reorganization in August 2005.
Kirkland’s chain of home decor stores is expecting to close 130 (of its approximately 335) outlets by the middle of 2009. The Levitz Furniture chain filed for Chapter 11 bankruptcy protection (for the third time in ten years) in November 2007 and shortly afterward began the process of closing its stores and liquidating its remaining inventory.
Macy’s chain of department stores (which also includes Bloomingdale’s) closed 11 (of its approximately 850) outlets in 2008.
Movie Gallery/Hollywood Video video rental chain filed for Chapter 11 bankruptcy protection in October 2007. Under the bankruptcy reorganization (which ended in May 2008), the chain closed 542 Hollywood Video stores and 378 Movie Gallery stores.
Pacific Sunwear closed 74 underperforming stores in its d.e.m.o. line in 2007 and closed all 154 of its remaining d.e.m.o. stores in 2008. (The company has not so far announced plans to close any of its core Pacific Sunwear outlets.)
Pep Boys chain of auto supply and repair stores closed 31 low-return outlets (out of approximately 600 stores) at the end of 2007.
Sharper Image chain of electronics and specialty gifts stores filed for Chapter 11 bankruptcy protection in February 2008, then began closing and liquidating all 184 of its outlets in June 2008.
Sprint, a global provider of voice, data and Internet services, announced in January 2008 that it would be closing about 125 of its 1,400 retail outlets.
Talbots Inc. announced in November 2008 that it was seeking to sell off its chain of J. Jill casual clothier stores. Talbots has already shed its Talbots Kids, Talbots Mens and U.K. businesses and has closed an additional 28 Talbots stores (out of about 1,400 total outlets).
Whitehall Jewelers acquired the remnants of the Friedman’s and Crescent chains in early 2008 after that combined company entered bankruptcy, then Whitehall itself filed for Chapter 11 bankruptcy protection in June 2008 and began liquidating and closing all 373 of its remaining stores.
Wickes Furniture chain began liquidating merchandise and fixtures at locations nationwide in February 2008 as part of bankruptcy proceedings. Wilsons Leather (the Leather Experts) shut down its mall-based locations in 2008, but in July 2008 the Wilsons Leather Outlet Stores (and e-commerce) business was acquired by G-III Apparel Group, which currently operates 119 Wilsons outlets in the U.S.
Zales Corp, which operates Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers, Mappins Jewellers, and Piercing Pagoda, closed approximately 105 retail outlets (out of 2,130) in 2008, half of them kiosks and half of them stores. However, the company also opened approximately 100 new outlets in 2008, so the net change in the number of Zales-operated stores was relatively small.