As announced in this post, KB Toys has filed for Chapter 11 bankruptcy protection and will be closing all stores. The main question, as far as this site is concerned, is whether they are going to redeem gift cards during the liquidation. While there have been reports from various KB Toys stores that they are still redeeming gift cards, we wanted to see an official announcement to support this claim.
Well, we did not have to wait long. According to this report from the Associated Press (AP), the bankruptcy judge overseeing the case has granted all of KB Toys’ first-day motions, which include approval to continue the redemption of gift cards. Yay!!!! The AP reports that the company currently has about $12 million in outstanding gift cards.
In my previous post, I had stated that companies that are in liquidation have no incentive to honor outstanding gift cards. I was wrong. According to an attorney for KB Toys, Joel Waite, there is actually an incentive for companies going out of business to redeem gift cards since customers redeeming the cards often spend more than the amount on the cards, thereby helping to move more merchandise during the going-out-of-business sale. That makes a lot of sense.:)
So, if you have a KB Toys gift card, you now have a final opportunity to use it or lose it.