Last week we highlighted how customers with gift vouchers from the music chain Zavvi were being told that since the company went into administration they weren't allowed to use those vouchers.
Dozens of you contacted us outraged that companies in administration continued to accept cash in their stores but wouldn't accept gift vouchers. Both Zavvi and womenswear chain Viyella are refusing to allow customers to use vouchers, even though they've already accepted money for them.
The current picture is muddled, but Nick O'Reilly from R3, which represents nearly all insolvency practitioners in the UK, says that it's quite normal for stores which go into administration not to accept gift vouchers.
He says that the administrators see customers with vouchers as creditors, and that as such they have to try to claim back their money like all other creditors, including the Inland Revenue and the government. A creditor is someone who pays money for something and doesn't receive it in return.
Nick added that by law administrators are required to treat all creditors equally and can't prefer one over the other, meaning that they wouldn't be allowed to prefer customers with vouchers over anyone else.
Make a claim in writing
Those customers need to make a claim by writing to the administrators with proof of their vouchers. The names of those administrators are usually on the website of the company which has gone into administration. But there's no guarantee that they'll get all of their money back, and it could take up to 12 months to process the claim properly.
Not all administrators have taken this approach. Woolworths was accepting vouchers before it closed, and children's clothing chain Adams is still accepting vouchers in its stores. Its administrators told Watchdog it made "good business sense" to continue to accept vouchers.
USC accepting vouchers in some stores
At clothing chain USC things are more complicated. Some 29 of its 61 stores have been bought out so are still accepting gift vouchers. In the 32 others which are still in administration, it won't accept them but it will direct people to other stores or to the company's website, where vouchers can be redeemed.
Watchdog spoke to some companies who gave the following responses:
USC's administrators, PKF, says that while only 29 of the 61 stores at the moment are accepting gift vouchers it hopes to have 38 stores bought back and accepting vouchers by the end of January. It says that customers can redeem vouchers bought from any store on the company's website and that if customers are having problems they can email vouchers@usc.co.uk or call 0800 876 6682.
Wedgwood Waterford
Meanwhile vouchers for tableware company Wedgwood Waterford were suspended when it first went into administration, but are now being accepted again.
Zavvi
The value of vouchers at Zavvi which can't be redeemed is currently just over £4 million pounds. A number of Zavvi staff have contacted Watchdog saying that they're in an impossible situation. They're worried about losing their jobs at the moment, but they're also having to deal with customers taking their frustration out on them.
Ernst & Young, the administrators for Zavvi, says that since voucher holders are creditors it can't prefer one creditor over another, as laid down in the Insolvency Act. It also says that it stopped selling vouchers in its stores on 4 December, when it became aware of problems with its sole supplier, EUK, part of Woolworths. It added that it doesn't own its stock so has significant costs.
Viyella
Meanwhile Poppleton and Appleby, the administrators for Viyella, say that customers with gift vouchers are seen as creditors. It says that it's confident of finding a buyer for the company and added that it has stressed that it would be a positive step for goodwill and customer care for a company which successfully buys Viyella to recognise the vouchers.
Adams
PricewaterhouseCoopers, the administrators for Adams, said that as it's still trying to sell the business it is accepting gift vouchers. It says it made good business sense to do so, but that it will continue to keep the position under review.
http://www.bbc.co.uk/blogs/watchdog/2009/01/gift_vouchers.html
Dozens of you contacted us outraged that companies in administration continued to accept cash in their stores but wouldn't accept gift vouchers. Both Zavvi and womenswear chain Viyella are refusing to allow customers to use vouchers, even though they've already accepted money for them.
The current picture is muddled, but Nick O'Reilly from R3, which represents nearly all insolvency practitioners in the UK, says that it's quite normal for stores which go into administration not to accept gift vouchers.
He says that the administrators see customers with vouchers as creditors, and that as such they have to try to claim back their money like all other creditors, including the Inland Revenue and the government. A creditor is someone who pays money for something and doesn't receive it in return.
Nick added that by law administrators are required to treat all creditors equally and can't prefer one over the other, meaning that they wouldn't be allowed to prefer customers with vouchers over anyone else.
Make a claim in writing
Those customers need to make a claim by writing to the administrators with proof of their vouchers. The names of those administrators are usually on the website of the company which has gone into administration. But there's no guarantee that they'll get all of their money back, and it could take up to 12 months to process the claim properly.
Not all administrators have taken this approach. Woolworths was accepting vouchers before it closed, and children's clothing chain Adams is still accepting vouchers in its stores. Its administrators told Watchdog it made "good business sense" to continue to accept vouchers.
USC accepting vouchers in some stores
At clothing chain USC things are more complicated. Some 29 of its 61 stores have been bought out so are still accepting gift vouchers. In the 32 others which are still in administration, it won't accept them but it will direct people to other stores or to the company's website, where vouchers can be redeemed.
Watchdog spoke to some companies who gave the following responses:
USC's administrators, PKF, says that while only 29 of the 61 stores at the moment are accepting gift vouchers it hopes to have 38 stores bought back and accepting vouchers by the end of January. It says that customers can redeem vouchers bought from any store on the company's website and that if customers are having problems they can email vouchers@usc.co.uk or call 0800 876 6682.
Wedgwood Waterford
Meanwhile vouchers for tableware company Wedgwood Waterford were suspended when it first went into administration, but are now being accepted again.
Zavvi
The value of vouchers at Zavvi which can't be redeemed is currently just over £4 million pounds. A number of Zavvi staff have contacted Watchdog saying that they're in an impossible situation. They're worried about losing their jobs at the moment, but they're also having to deal with customers taking their frustration out on them.
Ernst & Young, the administrators for Zavvi, says that since voucher holders are creditors it can't prefer one creditor over another, as laid down in the Insolvency Act. It also says that it stopped selling vouchers in its stores on 4 December, when it became aware of problems with its sole supplier, EUK, part of Woolworths. It added that it doesn't own its stock so has significant costs.
Viyella
Meanwhile Poppleton and Appleby, the administrators for Viyella, say that customers with gift vouchers are seen as creditors. It says that it's confident of finding a buyer for the company and added that it has stressed that it would be a positive step for goodwill and customer care for a company which successfully buys Viyella to recognise the vouchers.
Adams
PricewaterhouseCoopers, the administrators for Adams, said that as it's still trying to sell the business it is accepting gift vouchers. It says it made good business sense to do so, but that it will continue to keep the position under review.
http://www.bbc.co.uk/blogs/watchdog/2009/01/gift_vouchers.html