A federal judge ruled that Borders will not have to pay holders of unused gift cards, which could save the company's trustee more than $50 million.
File photo | AnnArbor.com
According to a report in the Chicago Tribune, U.S. District Judge Andrew Carter said it would be unfair to other creditors to let the cardholders recover their lost assets.
Borders filed for Chapter 11 bankruptcy protection in February 2011 with 642 stores in operation. According to the Tribune report, the Borders trustee now has approximately $61 million left to distribute to all claimants, including unsecured creditors. Judge Carter said that payment to gift card holders would have significantly altered the current distribution plan.
The case to re-claim gift cards was first filed in May 2012 by two consumers who were stuck with $125 in unused cards when the chain closed. In its final days, Borders recorded $156.2 million in “other revenue” that included the “write-on of unredeemed gift cards.”
All of Borders’ Ann Arbor assets have been sold, and many of the properties have new tenants. A former Borders store in Arborland is now an Ulta and Five Below, the downtown Borders flagship is currently being re-developed and the Borders headquarters buildings on Pheonix Drive is the new home of Gold Star Mortgage.
Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2