Companies filing for Bankruptcy - Update

Comments: Not all of the companies listed above (actually in my post below) have filed for bankruptcy. Hollywood Video's parent company, Movie Gallery, did in October 2007; Levitz did in November 2007; Sharper Image did in February 2008; and so did Linens 'n Things, in April 2008.

As of this writing, Performance Team Freight Systems, Circuit City, and Bed, Bath and Beyond have not.

In the case of those companies that have declared bankruptcy, the status of any outstanding gift cards or certificates will vary. The law does not require them to be honored. Levitz, for example, has stopped accepting gift cards altogether and recommends that holders file claims in bankruptcy court. Linens 'n Things has announced it will continue to honor gift cards at all of its nearly 600 locations. At last report, Hollywood Video was also continuing to accept gift cards and gift certificates under the terms of its restructuring plan, though it is also expected to close many of its outlets. Sharper Image stopped accepting gift cards temporarily after its filing but is now redeeming them on the condition that they are used to purchase goods totalling at least twice the cards' face value.

With more companies expected to file for Chapter 11 protection in 2008, experts quizzed by the financial news website TheStreet.com offered this advice: "behave as though every company is about to go belly up" -- meaning take your gift cards out of the drawer and spend them as soon as possible. A card that's worth $50 today could be worth nothing tomorrow.