What if your favorite store goes bankrupt?
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Got a favorite store?
Enjoy it now, because in this economic climate, today’s great shop could be tomorrow’s bankruptcy filing.
Already this year, Circuit City, Linens ‘n Things, Shoe Pavilion and Mervyns -- not to mention local stores -- have filed for the big BK.
The Better Business Bureau has issued advice for consumers on this topic. Here are some highlights:
If a company files for Chapter 11 bankruptcy protection, it usually intends to continue operations while it tries to sort out its financial troubles. In those cases, the company will often, but not always, deliver on goods and services, and honor gift cards.
If the filing is for Chapter 7, meaning the firm intends to give up and close down, you might have a tougher time getting what’s owed you. In those cases, a company’s remaining assets are usually distributed to creditors first. As the BBB puts it, ‘customers are at the back of the line.’
Warranties might be honored even if a chain closes down, because they’re often provided and run by third-party companies.
The BBB recommends paying with credit cards. Then, if a store ends up with a chain and lock on the door in the middle of the night, you can dispute the charge with the card company.
Use gift cards promptly. You never know what’s going to happen.
-- David Colker
