Due to rising prices and consumers tightening their spending habits, Linens ‘n Things is expected to declare bankruptcy (Chapter 11) early next week. So what does that mean to you and I? Run not walk to the store ASAP and cash in any remaining gift cards before they start refusing to accept them like Sharper Image did not too many weeks ago. Under Chapter 11 they will not sell everything and close like Bombay Company, rather they would reorganize and remain in business. The bad part is that gift card owners will be considered a “creditor” and will have to get in line with all other creditors to collect any money back once the bankruptcy petition is filed. The way bankruptcy works is that secured creditors go first, next is the unsecured (you and I) and it is in order of when the lien is filed (wow studying for the CPA did help!) to the courts.
Luckily, this news is hitting on a Friday after the banks, courts, and stock market has closed so you have a few more days to prepare unlike when Sharper Image declared. Excerpt from theStreet.com below
Home retailer Linens ‘n Things is expected to file for bankruptcy protection by early next week, according to reports, a warning sign for retailers already struggling in the economic downturn.
The Wall Street Journal reported Friday that the Clifton, N.J., retailer was expected to file for Chapter 11 bankruptcy-court protection by Tuesday, quoting several people close to the matter. Formerly a publicly-traded company, Linens ‘n Things was acquired by private-equity group Apollo Management in Feb. 2006 for $1.3 billion.
While not a complete shock to investors, the move would mark the first major retailer to seek protection.
2 responses so far ↓
1 Austin Chu // Apr 15, 2008 at 5:33 pm
Just because LNT is filing for bankruptcy does not necessarily mean that the cards will be void. I had 150 in LNT gift cards and I spent it all yesterday. By all means, spend your cards and use them quick. It’s simply too early to tell. Who knows what will happen.
2 cate // Apr 15, 2008 at 6:06 pm
That is a good point but the sooner people use them the better off. People who did not move fast enough at Bombay or Sharper Image are learning the hard way about gift cards and their “value” during bankruptcy.
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