Gift Card Holders Bankrupt Entity

By Amy E. Feldman

PHILADELPHIA (CBS) -- If a company knows it's going to go bankrupt, does it have to stop selling gift cards?

After a long descent from its high times selling CB radios and pagers, Radio Shack declared bankruptcy in February of this year.

The company continued to sell over 16,000 gift cards between January 1-February 4 after it knew that sluggish Christmas sales spelled the end for the company.

The Texas Attorney General recently filed a lawsuit against the company, claiming that the continued sales of those gift cards was unfair and unlawful when the company knew that the cards would soon be as useless as a Betamax tape.

Whether the Attorney General will win—and if so whether they'll be any money left to reimburse the gift card holders remains to be seen. But it's a good lesson to consumers: If a company declares bankruptcy, at best a person who holds a gift card will get to file a claim to get back any money that remains in the bankrupt entity.

At worst, all money disappears when the company closes its doors. Your best bet is to go to the information superhighway to find out more about the health of any business whose gift card you plan to purchase.