Business Bankruptcy

25 Jan Borders Gift Cards and Bankruptcy: Time Not to Panic

Borders, the national book store with actual stores, may have to file bankruptcy soon. Is that going to mean disaster for its customers? That's very unlikely. Borders Group has hired bankruptcy lawyers. It is taking (even) longer to pay for inventory to conserve cash. This is a predictable dance by heavily leveraged retailers in a down economy, especially retailers in declining actual store businesses competing with Internet retail -- like Amazon. If they stay independent, this is a company that's very likely to file bankruptcy. But that's not a death sentence anymore than it is for the millions of families that file every year. Borders is doing what it needs to do to recognize, reorganize, and try to move on. They'll probably close a lot of stores and layoff (more) employees. What won't they get rid of? Their customer retention programs. A gift card from Borders is, technically, a debt they owe to you. So is the Rewards Plus program. If they file you're screwed, right? Probably not. And yes, some employees are complaining about being encouraged to sell Rewards Plus. I've heard these comments repeatedly on the Internet. I'm sure Borders is hearing it too. These worries are more about how little folks know about Chapter 11 than the reality.
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