It’s becoming increasingly likely that Toys R Us will indeed end up in complete liquidation (we wrote about this before). All UK stores are already confirmed to be closing, and that’s the likely outcome for U.S. stores too and all U.S. stores are now confirmed as being shut down too leaving tens of thousands without jobs.
If that happens there’s a good chance all Toys R Us gift cards will become worthless as the stores may not accept them during the liquidation process, depending on how the agreement is structured in court.
In fact, UK-based Toys R Us locations already don’t accept gift cards since March 11. As of today, U.S. based stores are still accepting gift cards, but that could change any day.
Senator Chuck Schumer from New York sent a letter Wednesday to the Federal Trade Commission, asking them to ensure consumers have time to use their existing gift cards before Toys R Us closes up shop. He also mentioned the idea of consumers being able to redeem gift cards for cash. (NYDailynews) This is part of a broader conversation about the consumer protections for store-specific gift cards.
If you are holding any Toys R Us gift cards, use them up now. If Schumer gets his way, it would be a valuable proposition to hold onto the cards and cash them out, but the more likely eventuality is that the cards will be honored for use, not for cashout, or that they’ll become entirely worthless.
Morley
I agree with Cryin’ Chuck.
Store credit is clearly a form of fiat currency, which should be considered a debt redeemable for equivalent cash or goods whenever the creditor wishes.
If a debtor can no longer continue operations, it should definitely be required by law to repay its creditors given that it won’t be able to compensate them any other way.
Any business unwilling or unable to honor their IOUs shouldn’t be handing them out in the first place, and being hollowed out by corporate raiders doesn’t erase the fact that legal tender already changed hands.
This isn’t a churning related issue so much as an institutional trust issue where debts should generally take precedent over lining the pockets of people who destroy corporations (and lives, if you count the employees).
That, and I think the last thing anyone would want is a crash in the gift card resale market once everyone realizes they’re effectively worthless and a complete scam thanks to the strong empowered CEOs of the world who always seem to dabble in golden parasailing.
It’s about time they (as well as cryptocurrency) had some regulation and stabilization to ensure that their value is honored, even if it forces the market to adapt to gift cards retaining their full cash value.
Like many of the economic proposals Chuck Schumer makes, this one is stupid. I see no reason why bankrupt stores should be required to “cash out” your gift cards — especially since non-bankrupt stores are almost never required to do this. When you buy a gift card, you are naturally take on some risk. For this reason, and promotional purposes, many gift cards are sold at a discount. It would be nuts to now have gift cards function like debt instruments where there would be a secondary market hoping for bankruptcies and cash payouts!
On the other hand, it’s certainly reasonable to expect operating retail establishments in bankruptcies to honor gift cards. That’s consumer friendly, and reasonable. It also gives gift card holders an effective “heads up” that now might be a good time to use up your gift card. It enables gift card holders the same opportunity to use their gift card that they had before the bankruptcy. Demanding more than this from struggling, bankrupt companies is just wrong and stupid.
Went there today to burn through some cards, nothing marked down. Used cards no problem, they even moved my remaining balance onto a new G/C since the old one had no pin.
Been to a few retailers that were going out and this is not what the store looked like today. There are way more toys in the average store than Wally and Target combined. No way that will be a quick liquidation. They may go the Sears route and sell the whole store by store inventory to a liquidator.
Both Hasbro and Mattel are very concerned about the loss of their major sales outlet. It will be an interesting show to watch.
Many years ago my sister (not a professional liquidator) bought a couple of aisles of a Home Depot being closed for pennies on the dollar. We were both doing remodels so it worked out alright. I’m not sure how to profit from this with TRU (unless the Lego aisle sells for pennies). Just sit back and watch the show I guess. 🙂
Are BabiesRUs stores closing too or is it just Toysrus?
All Toys R Us and Babies R Us stores are closing. Babies R Us are ‘companion’ stores, owned by the same company and apparently always paired with a Toys R Us branded store in locations that had the space for both.
#ShittyMS Buy thousands of ToysRUS GC with AT&T Access More now and wait to cash them out.
(Please don’t do this guys, really just joking)
FWIW, my mother in law went to a toys r us in upstate NY to look for sales. Nothing marked down there, she spoke with a “manager” who said the staff have no idea what’s going on, heard they could be closing doors as soon as tomorrow. Also not accepting gift cards for payment.
They weren’t accepting gift cards?
I went to a Babies R Us store today to get rid of my last $400 in gift cards. Better safe than sorry. The person in front of me asked the cashier if he knew anything and his answer was “We don’t know anything, we’re operating as normal” which seemed extremely fake to me.
I doubt the cashier was being “fake”. When large chain stores are going out of business (locally or nationwide), they wait as long as possible before telling the store employees when they will be losing their jobs, when procedures/pricing will be changing, etc. I don’t know how much that kind of delay actually accomplishes, but it’s pretty much standard.
So buy a giftcard at discount rate with a credit card, hope to cash it out for 1:1 cash???
If you’re feeling brave get TRU GCs at a big discount then immediately use them to buy Lego sets.
I like the idea, but a current 12% discount seems to be the highest available. Not really that big IMO.
No chance they cash it out 1:1. GC is an unsecured claim. Forcing a 1:1 cash out would fly in the face of bankruptcy law and as was pointed out before have major future consequences.
It’s not a serious proposal.
Is it safe to buy gift of college cards? Any chance that after the upload they will not make it to the 529 plan? There’s a 14 wait….
I’d guess that’s safe
Can you use them at Babies R us? Or is that closing also?
Yes, and yes.
yes, and yes. but not all locations are closing.. yet..