When it comes to bankruptcy and gift cards, customers of small businesses suffer the most when a local business goes bankrupt. Often times, customers find out about the bankruptcy months later, when it is too late to take action. Even well informed customers find it hard to get their money back once a local business goes bankrupt.

This story from Missouri shows how customers can petition their state’s attorney general’s office when they find themselves in a similar situation. According to the report, a local spa (Spa 151) went out of business after operating for a little more than two years. More than 300 consumers filed complaints with the state’s attorney general’s office alleging that they held gift cards or gift certificates that could not be redeemed.

After almost four months of working on complaints filed against Spa 151, the Missouri Attorney General, Jay Nixon, announced on June 3rd that the former owners of Spa 151 will pay up to $103,000 to redeem the cards and certificates.

This is great news! As you have probably read from my previous posts on this topic, your options when a gift card issuer goes bankrupt are limited. Some gift card issuers are able to successfully petition the bankruptcy court to allow them to continue the redemption of gift cards. For those that suspend the redemption of gift cards, the only option consumers have is to file a claim against the assets of the company with the bankruptcy court. This option however yields very little since gift card holders, as unsecured creditors, are at the bottom of the pecking order by which creditors are paid during bankruptcy.

That is why this action from Missouri is significant since it shows that customers of local businesses have an option to petition their state’s attorney general’s office if they are left with unredeemable gift cards after bankruptcy. This action is particularly recommended when the local business continues to issue gift cards days or weeks before filing for bankruptcy.