Circuit City Bankruptcy, Christmas Gift Cards and You

During Bankruptcies, Are Card Recipients Out of Luck?

Circuit City filed for Chapter 11 bankruptcy protection on Monday, according to info found here at CNN Money. It is one of a number of stores which have gone out of business or have been faced with financial troubles recently, companies ranging from Sharper Image to Linens N Things. With the Christmas shopping season fast approaching, how do shoppers know if Christmas gift cards are safe to buy - or whether to simply hand over cash? Although a gift card can be convenient, with lovely graphics and designs, and certainly tailored to a Christmas gift recipient's taste, it might not be a wise choice - financially speaking.

Circuit City gift cards and Christmas gift cards - are they safe to buy?

For now, Circuit city management seems to be taking the stand that gift cards will be honored. A call to a local Indianapolis Circuit City location noted that all stores were up and running and accepting gift cards - with one exception. The Circuit City employee noted that the Circuit City Outlet store in Indianapolis (which does carry the name Circuit City, according to the local employee) would not honor gift cards.

Even though they are not technically owned by Circuit City, the Circuit City outlet store does carry the Circuit City name and is a liquidation store. This could be a bit confusing to customers who see the name Circuit City on the store exterior....so now you know. No gift cards at those stores. I actually asked the question, "But you are called Circuit City?" The answer was yes but they were clear that they were not owned by Circuit City. Maybe I'm the only one that finds this a bit confusing but this was the information given me.

Should owners of Circuit City or Christmas gift cards cash them in immediately?

Perhaps so. According to information at Snopes.com, found here and updated as of November 10, 2008 (including Circuit City Chapter 11 bankruptcy information), the information is classified as "partly true", possibly due to the complexities of Chapter 11 business bankruptcy filings. Some companies pull out of their slump, some do not, and some have temporarily or permanently suspended the use of gift cards.