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THIS FAMILY favorite restaurant has recently declared bankruptcy but there is still $50m worth of unused gift cards.
Fans fear their gift cards may be invalid as the popular chain announces it has run out of money.
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TGI Friday’s Incorporated still has thousands of hopeful customers who are yet to cash in millions of unused vouchers.
Unfortunately the diner filed for Chapter 11 protection on November 02 meaning many hopeful TGI Friday fans may not get their moneys worth.
It’s unclear where the cash will come from if every unused gift card is suddenly claimed.
During TGI Friday’s first bankruptcy hearing on Monday, Judge Stacey Jernigan said: “I did a double take on that.
“I was imagining, you know, grandparents who got gift cards for their kids in college and then it got thrown away.”
It’s not hugely likely that the $50 million will be all redeemed, but the issue the restaurant chain faces is that they are valid forever.
Any old voucher in a side drawer or an old birthday card could be used in store.
The American food chain said it will continue to honor the gift cards in bankrupcty and explained how they were an important away to increase revenue.
Altogether the vouchers tot up to around $132,000 in sales per week.
With recognizable red and white stripes of the TGI Friday’s logo has been familiar for years and the colors have become an synonymous with the household name.
The first store was built in 1965 and went on to become an international sensation.
At the hearing, Independent Franchisee Association Inc. lawyer Jason Binford said: “Franchisees’ want to ensure there is a source of funds available to reimburse them in the event there’s a ‘run on gift cards.’
Customers tend to flock to stores to redeem their gift cards when they hear that a retail chain has filed bankruptcy.”
Due to this, an influx of customers demanding their vouchers are cashed is probable.
Regardless, Binford said it should be relatively easy for the company to solve the issue in the upcoming weeks.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
