Can a company filing Chapter 11 stop honoring gift cards?

A retailer may file for bankruptcy and petition to honor gift cards. However, it may also file for bankruptcy and later, after bankruptcy proceedings have begun, it can petition the court to allow it to accept gift cards. However, the unknown time between the filing and the petition will leave customers unable to use their gift cards. Unfortunately, a retailer may also decide not to seek permission from the bankruptcy court to honor gift cards. In this case, gift cards will be valueless and one would need to file a claim as a creditor against the bankruptcy estate.

In Chapter 11 bankruptcy cases, the purpose is to keep a business alive and retain the businesses customers. Therefore, it is likely that the retailers will seek permission to accept gift cards. The only main concern would be when the customer will be able to access the amount on their gift cards. If one anticipates a future bankruptcy, they should make sure to use their gift card sooner rather than later.