DALLAS (CBS11 News) – Consumer Justice found millions of dollars worth of gift cards to a popular restaurant, are now worthless.
Tina Stanley found out the hard way after trying to use the cards at Texas Land & Cattle. She said she was told that the cards were no longer valid. Turns out, the company that owned the restaurant chain had filed for bankruptcy, and a new owner was at the helm.READ MORE: Red Cross Hoping To Increase Blood Supply With Opening Of New North Texas Donation Centers
“I tried calling him,” said Stanley, “his name is Art in Albuquerque.” Stanley said he told her there was nothing he could do. Executives at Creative Foods USA, the new owner, told Consumer Justice the gift cards were part of a contract between the previous owner and the gift card distribution companies and suggested that card holders contact those companies.
Creative Foods USA gave CBS11 this statement that reads in part:
Our previous owner filed for Bankruptcy in 2017. Creative Foods LLC purchased this location from the Federal Courts. Gift cards issued in the past were part of a contract between the past owner and gift card companies. The gift card companies would not allow us to assume the past contract and therefore we are unable to honor the value on the card.
But those companies said they don’t have the money — the previous owner does.
According to bankruptcy filings, Texas Land & Cattle has $26 million in gift cards that can’t be used. Jason Rodriguez, a commercial bankruptcy attorney, said this issue comes up nearly every time a company goes into bankruptcy. “The money for the gift cards has already gone into the coffers… prior to even the bankruptcy,” said Rodriguez. “[The companies] use it as they please, like for operations.”
Rodriguez said some stores or restaurants take the gift cards — at a loss — to keep customers happy. “A lot of times, the larger companies will make arrangements in the bankruptcy case to continue to honor them.” The new owners of Texas Land & Cattle said if they did that, they would go out of business.
Rodriguez suggests using gift cards immediately after purchasing or receiving, because once a company files for bankruptcy, it’s hard to get that money back.READ MORE: Dallas Federal Reserve Bank President To Step Down Following Trading Disclosure
That’s a lesson Tina Stanley said she won’t soon forget. “From here on out, I’m not going to buy a gift card from a single corporation or single entity unless it’s from Visa, Mastercard, or an American Express card, because it can be used ubiquitously.”
Rodrigues said if you have a gift card for a store that filed for bankruptcy, there are several steps you can do to try and recover your money.
♦ Do a quick web search to see if the store has a website or email specifically for gift card holders.
♦ If a website has not been set up, you’ll need to fill out a “proof of claim” form. Send the form to the court where the company filed for bankruptcy.
According to bankruptcy filings, in the Texas Land and Cattle case, the “main” case is 17-40297 in the United States Bankruptcy Court for the Eastern District of Texas, Sherman Division.
Gift card holders need to send their form here.Texas Inmate Rick Rhoades Faces Execution For Fatally Stabbing Brothers 30 Years Ago