Folks, I felt the need to provide a quick update on major retailers that have recently filed for bankruptcy and what that means for gift card holders.

It is estimated that consumers will lose about $100 million this year on gift cards due to bankruptcies. If you are still holding on to gift cards from last Christmas or birthday, now is the time to use them or risk losing them.

Below is an updated list of recent major retailer bankruptcies and their impact on gift card holders:

Tweeter - Tweeter, the electronics store chain filed for bankruptcy on Nov. 5, 2008. The company was granted permission by the U.S. Bankruptcy Court on November 10th to continue the redemption of gift cards through Saturday, Nov. 15 (yes, only 5 days to redeem gift cards). If you were unable to redeem your gift card by that date, the only option left is to file a claim with the Bankruptcy Court for the unused portion of your gift card. However, you could be waiting a long time for this and chances are, you may get pennies on the dollar, if at all.

Circuit City - Circuit City filed for bankruptcy reorganization, meaning that they plan to restructure the business and come out of bankruptcy a more efficient company. They are still accepting gift cards during the bankruptcy and are still issuing new gift cards. If you haven’t done so already, use your Circuit City gift card soon. I will also advise against buying a new Circuit City gift card at this time.

Linens ‘n Things - Linens and Things initially filed for bankruptcy reorganization in May 2008 but things did not work out as planned so the company decided on October 15th to shut its doors. They are still accepting gift cards during the liquidation so this is your last opportunity to use your Linens and Things gift card or say goodbye to it forever.

The Sharper Image, Bennigan’s and Steak & Ale Restaurants, Value City Department Store, Mervyn’s Department Store, Steve & Barry’s, Boscov’s Department Store have all declared bankruptcy this year. For more on these companies, check out the Bankruptcy & Gift Cards page.

Folks, as predicted in my last posting regarding Circuit City, the company is filing for bankruptcy. I hope those of you who have a Circuit City gift card have used them. If you haven’t, your widow of opportunity to use them may be short. According to this story from Bloomberg, Circuit City has filed for chapter 11 bankruptcy protection. This means that the company hopes to reorganize its operations and emerge from bankruptcy as a leaner and more efficient company.  

However, while I sincerely hope they emerge a better company, this is not a time to hope. If you have a Circuit City gift card, NOW is the time to use it.

My sense is that the company will continue to honor gift cards even during bankruptcy since they will not risk angering the very customers they badly need during this difficult time, including gift card holders. However, as seen with Linens ‘n Things, bankruptcy reorganizations don’t always go as planned, and may lead to eventual liquidation. Circuit City may survive but in today’s economy, you never know. 

Folks - For those of you who have been reading this blog all year, you are probably familiar with the stories I have posted about Circuit City and the constant rumors about whether they are going to stay in business or not.  In April 2008, I predicted in this piece that of all the retailers that are struggling, Circuit City, together with Linens ‘n Things, The Gap, Sears, Kmart, Pier 1, and Office Depot are likely to go bankrupt. Well, unfortunately, some of this is coming to pass. Linens ‘n Things is going out of business and it looks like Circuit City may not be too far behind.

I am putting Circuit City in this category because the company has yet to find an answer to Best Buy. In May, I posted this story about problems at Circuit City and the offer from Blockbuster to merge the two companies. Since then, the company has missed earnings and has been laying staff off. But the problem seems to be the business model, which has yet to be fixed to better compete with rival Best Buy.

The current economic crisis has made things worse and according to this story from Reuters, the company is planning to close 150 stores and lay off thousands of workers. Whether this will stop the bleeding is anybody’s guess. So, if you currently hold a gift card from Circuit City, I strongly urge you to use it NOW! There is a real possibility the company may have to file for bankruptcy and you don’t want to be left with worthless gift cards.

Folks, the economic tsunami has taken down yet another retailer - Linens ‘n Things. As I reported in this piece back in April, Linens ‘n Things has been struggling under the weight of the economic downturn. The company filed for bankruptcy reorganization in May, hoping to come out of bankruptcy as a leaner, more focused company. It appears things did not work out that way.

The company has therefore abandoned its reorganization plan and has auctioned its assets to the highest bidder. As a result, beginning Friday, October 17th, all remaining 371 Linens ‘n Things stores in the United States will begin their “Going out of Business Sales” where their entire inventory will be sold at a discount.

What does this mean for gift card holders? If you currently hold a Linens ‘n Things gift card, you may be out of luck. As I mentioned back in May, the gift cards were redeemable while the company was undergoing reorganization. But now that they have decided to liquidate the business, your card may be worthless. However, I encourage you to try and see if they will accept your card during the liquidation sale (please be kind and post your findings in the comments section to help others in a similar predicament :):)

Which brings me to the question of why the company did not alert gift card holders to come in and redeem their cards when they knew they were going under? I will explore this issue in another article since the same thing happened with The Sharper Image when they abandoned their reorganization plan and decided to liquidate the entire business, leaving gift card holders with worthless gift cards.

Today’s piece is a follow-up to this story I posted on June 18th about a local spa in Missouri - Spa 151 that went out of business, leaving gift card holders with worthless cards they could not redeem. Some gift card holders filed complaints with the Missouri attorney general’s office. The attorney general was able to settle the issue with the owners of the spa for $103,000.

So far, 660 people have filed claims with the attorney general’s office and anyone with a claim has been given until Sept. 4th to file, after which checks will be issued to those affected. If you are a Spa 151 customer currently holding their gift card and would like to file a claim, click here for details.

This is great news and it sets precedence for how consumers can rely on their state’s attorney general’s office to fight for them in these situation, especially with local businesses that suddenly close shop, leaving their customers with worthless gift cards.

More good news for holders of bankrupt Bennigan’s and Steak & Ale Gift Cards. According to this story, Logan’s Roadhouse will begin accepting unused gift cards from Bennigan’s and Steak & Ale restaurants. This follows a similar announcement by Texas Roadhouse.

As you are probably aware, Bennigan’s and Steak & Ale filed for chapter 11 bankruptcy earlier this month. Both companies are still redeeming gift cards but as you can see, the competition is trying to take advantage of this situation and steal customers from Bennigan’s and Steak & Ale.

Boscov’s Department Store, America’s largest family-owned independent department store, filed for chapter 11 bankruptcy protection on Monday, August 4th. According to this story from the Associated Press, the company blamed it’s current predicament on the current economic turmoil, with shoppers struggling with higher food and gas bills, tighter credit, a persistent housing slump and increasing layoffs. This has caused consumers to spend less on discretionary items. As a result, the company has been having difficulty paying suppliers. The company will close 10 stores while it reorganizes.

Boscov’s received approval from the bankruptcy court to continue the redemption of gift cards. If you have a Boscov’s gift card, NOW is the time to use it or lose it.

Finally, a bit of good news for holders of bankrupt Bennigan’s and Steak and Ale Gift Cards. Texas Roadhouse has announced that holders of Bennigan’s and Steak and Ale Gift Cards gift cards can bring them to any Texas Roadhouse location and exchange them for free entree certificates.

Best of all, the free entree certificates have no menu item restrictions, which means they can be used to buy any item on the menu at Texas Roadhouse. All certificates expire on August 30th, so hurry and get rid of those Bennigan’s and Steak and Ale Gift Cards.

As always, i would appreciate your comments on this (whether you are able to exchange your Bennigan’s and Steak and Ale Gift Cards at Texas Roadhouse).

Mervyn’s department store has filed for chapter 11 bankruptcy protection. Mervyn’s stores will remain open and business will continue as the company goes through the bankruptcy process. According to this story from MarketWatch.com, the company has received approval from the bankruptcy court to continue to honor outstanding gift cards and loyalty programs.

Mervyn’s now joins a growing list of retailers that have filed for bankruptcy this year, including well known companies like Steve & Barry’s, Linens ‘n Things and Sharper Image. If you currently have a Mervyn’s gift card, NOW is the time to use it or lose it.

I expect more retailers to file for bankruptcy in the coming months considering the worsening economic situation. If you have received a gift card you don’t want or can’t use, you can sell it for cash at our sister website GiftCardRescue.com or exchange it for another card of your choice. You can choose from a list of over 30 popular gift cards including merchants like Home Depot, Target, Abercrombie & Fitch, Macy’s, New York & Company and Best Buy.

Stay tuned for updates on Mervyn’s bankruptcy situation and any changes to their gift card redemption policy.

Another one bites the dust. Bennigan’s and Steak & Ale, both owned by Texas-based Metromedia Restaurant Group file for chapter 7 bankruptcy protection. This will result in the closing of more than 300 corporate-owned locations. According to this story from the New York Times, The Ponderosa and Bonanza restaurants, which operate under another entity, Metromedia Steakhouses, were not covered in the bankruptcy.

So, what does this mean for gift card holders? I am not sure. The company is yet to address what will happen to gift cards. I will keep you posted as soon as I hear something. In the meantime, if you have a Bennigan’s or Steak & Ale gift card, try and see if you can still use it while the restaurants remain open.