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Posted on Fri, May 24, 2013 : 2:59 p.m.

Judge says Borders gift card holders won't get money back

By Ben Freed


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 |

Borders will not have to pay anything to holders of approximately $210.5 million worth of gift cards, a Manhattan federal judge ruled Wednesday.

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 You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at Follow him on twitter @BFreedinA2



Sat, May 25, 2013 : 11:27 a.m.

Related I think: I recently had a rare opportunity to observe what cards people carry in their wallets & purses. (This was part of a consumer study.) Amazing: almost every person observed had many cards: credit, debit, gift and customer loyalty cards. Many spent extra time just trying to locate a needed card for a purchase. Some had credit cards which "failed" for one reason or another and spent more time searching for a credit /debit card that would "work." - I can't help but wonder if many gift cards get "lost" in the "packs" of cards in people's wallets & purses.


Sat, May 25, 2013 : 2:19 p.m.

TruBlu76 - For once I agree completely. As we heard rumors of Border's demise, we went thru wallets, purses, bill baskets, coin bins and other locations that might have something resembling a credit card size piece of plastic and turned up over 20 Border's gift cards around our house. We immediately went to Borders and spent them all. It took a couple of hours to find them all, but we did. I suspect many people may discover a stray card a year or two from now, which is why gift cards are so popular with stores, they get the money up front and someday most of the cards will be redeemed, but not all.


Fri, May 24, 2013 : 7:28 p.m.

Good decision. File this one under: Snooze ya' lose. . . the downward spiral of Borders was hardly a secret. . if you're truly that unaware. . . yeah you may very well lose out. Its called being a responsible consumer.


Sat, May 25, 2013 : 4:01 a.m.

I never understood gift cards. Why not just give cash? That way the recipient is not limited to one retail establishment.


Fri, May 24, 2013 : 11:28 p.m.

OK, absent any opinions from the legal community I have consulted "the google" and we are going with: Snooze tu perdis ("you snooze you lose" in Latin)


Fri, May 24, 2013 : 11:01 p.m.

Buyer beware, gift cards are not as good as cash. Better off buying a pre paid debt card from Visa, then some store gift card.


Fri, May 24, 2013 : 10:06 p.m.

I agree it was well known they were going under. Gift cards make a lot of money for companies because they know there is a certain percentage of them never turned in, for hospitality claims it is over 40% non-redemption. More troublesome is the precedent this sets for future cases, most gift cards are cash equivalents without owner identification, you know how they say "treat this card as cash"? Well, obviously the court does not treat those cards as cash, or the owners would have a claim. So which is it?


Fri, May 24, 2013 : 9:43 p.m.

There must be some sort of Latin legal term for the snooze/lose thing. Because there is so much precedent.


Fri, May 24, 2013 : 8:08 p.m.

I couldn't agree more.