On March 7 the renowned e-tailer will shut its electronic doors. Its next move will be a declaration of bankruptcy. But if you are still holding an eToys gift certificate, use it now. After midnight on March 7, whether or not the gift certificates are worth anything is largely up to the bankruptcy court. And if you happen to have a gift certificate from a shuttered store, online or off, you could get burned.
Some companies simply close up without declaring bankruptcy.
In cases like that, gift certificate buyers can probably forget about getting anything back. But it could be different if a company files for a Chapter 11 reorganization under federal bankruptcy law. Under Chapter 11, business continues while management and the company's creditors develop a plan to make it profitable. If there seems to be a good chance that the Chapter 11 reorganization will work, the company may ask the bankruptcy court for permission to honor items dating from before the bankruptcy, such as gift certificates, credit slips, merchandise returns and exchanges and prepaid phone cards. The goal is to keep you happy and loyal because they need you later.