In September 2010, we wrote about Blockbuster's bankruptcy and recommended anyone who owned a Blockbuster Gift Card to go out there and redeem it soon or risk getting stuck with a worthless gift card. We also sent out Bankruptcy Alerts to those who had registered ownership of the gift card in their ScripSmart Account. Furthermore, the Blockbuster Gift Card was on our list of gift cards to avoid for quite some time before the company actually filed for Chapter 11 bankruptcy protection.
One Last Chance
Obviously Blockbuster's bankruptcy proceedings are not going well; the company is set to stop honoring gift cards on April 7, 2011. That gives gift cardholders one more week to go out there and redeem their Blockbuster Gift Cards: April 6, 2011 will be the last day Blockbuster gift cards will be accepted. If you own a Blockbuster Gift Card go out and redeem it now!
Local Blockbuster Call
I called my local Blockbuster and was informed the gift cards were being sold up to "about two weeks ago" and they stopped selling gift cards after learning they would no longer be accepted. According to Blockbuster's website, the Notice was effective 3/23/11 which indicates gift cards where being sold up to one week ago. This indicates a consumer could have purchased a gift card from Blockbuster and end up with a two week expiration date! I'm waiting on a response from Blockbuster's Corporate Communication Team on more details and will update this post accordingly.
Update: Blockbuster Corporate Communications responded to my note. They believe it was 03/21/11 and said Blockbuster would be sold to a new owner on 04/07/11. I also asked if there was a chance of the new owner accepting the gift cards and they answer was yes. However, I'd say the chances are slim the new owner decides to accept the cards, although it would be a good way to avoid burning the customer base and continue Blockbusters turnaround.
Chapter 11: The Red Flag
Filing for Chapter 11 bankruptcy protection indicates a company plans to restructure and stay in business. While it's possible the company will survive, it's a very good reason to go out there and redeem your gift card as soon as possible. In fact, it's a good time to go out there any redeem all of your gift cards. As we've seen, there is just no reason to take a chance. I've already sent a personal note to those who currently have a Blockbuster Gift Card in their account letting them know about the April 6th deadline.
Companies Are Allowed To Sell Gift Cards While Under Chapter 11 Bankruptcy Protection
To the best of my knowledge, there are no gift card laws which prevent a company from selling gift cards while in Chapter 11. In fact, it seems to be quite common to "continue business as usual". The decision to accept gift card while in bankruptcy is the Bankruptcy Court's and often times gift cards are also accepted. However, this is one good example of why it may not be such a great idea for company to solicit unsecured loans from consumers (market and sell gift cards). There will be another post in the future covering this point in more detail.
ScripSmart Accounts Can Help
Unfortunately, it's all too easy to be Blockbuster gift cardholder and have no knowledge of this deadline. That's why ScripSmart offers an alert system. One such alert is the Bankruptcy Alert; simply put, when we catch wind of a company going into bankruptcy or consider a gift card to be issued by a financially unstable company, we'll send you an email giving you a heads up and one last chance to avoid getting stuck with a worthless gift card. Sign up here and register the gift cards you own for some extra protection. The service is free.
For the record, here is the statement from Blockbuster's website:
NOTICE EFFECTIVE 3/23/11: On 8/23/10, Blockbuster Inc. ("Blockbuster") filed for bankruptcy in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). On 2/21/11, Blockbuster filed a motion with the Bankruptcy Court requesting authority to sell its assets (the "Sale Motion"). A copy of the Sale Motion is available at http://www.kccllc.net/blockbuster. On 3/11/11, the Bankruptcy Court entered an order authorizing Blockbuster to proceed with certain procedures related to the Sale Motion. In connection with this sale process, effective as of 4/7/11, BLOCKBUSTER GiftCards® ("GiftCards") WILL NO LONGER BE HONORED. Blockbuster intends to honor GiftCards presented by consumers through 4/6/11.