Yesterday, American Airlines filed for Chapter 11 bankruptcy protection. Those who added the American Airlines Gift Card to their ScripSmart Account received a bankruptcy alert via email suggesting they redeem their gift card as soon as possible. It's an easy way for ScripSmart to help consumer avoid worthless gift cards. (You can create your free account here.)
It's never good to see a bankruptcy and for gift cardholders, it serves as what may be their last signal to use a gift card before it becomes worthless. The fact is, most companies continue to honor and sell gift cards after filing for bankruptcy protection. It's also true many company's emerge from Chapter 11 in a better financial position to serve consumers for years to come and continue accepting gift cards. However, when a merchant files for bankruptcy protection, there is a much greater risk it's gift cards will become worthless.
We don't need to look back far to see two Chapter 11 filings from large national merchants result in worthless gift cards. Blockbuster filed for Chapter 11 in November 2010 and it's gift cards were worthless in April 2011. Similarly, Borders filed Chapter 11 bankruptcy protection in February 2011 and it's gift cards were worthless in September 2011. The bottom line is, there a very real possibility of a gift card becoming worthless and gift cardholders don't need to risk it. Unlike most creditors, they hold a loan which can be redeemed for merchandise at any time.
As a result of the bankruptcy, both American Airlines Gift Cards are currently ranked "Buyer Beware" by ScripSmart:
Often times when a company files for bankruptcy protection, gift cards are not mentioned on their website or press release. However, there are companies which specifically address gift cards. Thankfully, American Airlines is one of those companies. On their website this morning I noticed a prompt stating gift cards would still be accepted. I reads:
"American Airlines is continuing to sell and honor AA Gift Cards as usual.American is flying normal schedules and all customer programs are continuing as usual.Additional information about the Chapter 11 reorganization is available at www.aa.com/restructuring."
The company also has constructed a webpage dedicated to the restructuring which also addresses gift cards. Both are great to see from my perspective and help relay important information to consumers. I'll add, if you own an American Airlines Gift Card, use it before you lose it.