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Rush to Redeem Toys R Us Gift Cards Before Liquidation

Bob Niedt, Online Editor, Kiplinger.com
The bankrupt retailer is going out of business and will honor gift cards for Toys R Us and Babies R Us only until April 15.

If you're carrying Toys R Us gift cards or Babies R Us gift cards, you only have a month left to spend them ahead of the bankrupt retailer's planned liquidation.

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The New Jersey-based retail chain announced Thursday it will be closing all of its U.S. and Canadian stores over the next few months. At the same time, company officials said gift cards to Toys R Us and Babies R Us would be honored only until April 15, or 30 days from the March 15 announcement.

Industry experts are encouraging cardholders to spend down those gift cards as soon as possible, rather than be stuck with worthless gift cards in their wallets.

"Your best bet is to spend gift cards right away," says Tom Olk, vice president of risk at Raise, an online reseller of gift cards. "Otherwise, if there is value left after the company physically closes, you become an unsecured creditor. In the repayment waterfall, you will be placed behind any secured credit holders, such as debt holders or loan providers. As a result, you would receive only pennies on the dollar...if you even receive that much."

Toys R Us hasn't fixed a date to its shutdown of its 735 U.S. stores. It filed motions in U.S. Bankruptcy Court seeking approval of the liquidation.

Toys R Us has been operating under bankruptcy protection since September 2017.

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The company's CEO, David Brandon, told staffers the company will keep operating the Babies R US baby registry as well as the online Babies R Us store as it seeks a buyer.

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