High Street chain Barratts Shoes entered administration this week for the third time since 2009. This is the most recent news of a company administration to hit the high street since HMV, Blockbuster, Comet and Jessops all encountered serious financial difficulties shortly after Christmas 2012. Blockbuster has also recently appointed Administrators for a second time this year.

The entering into administration of companies such as HMV and Comet in the past year meant that consumers who had received gift vouchers were left in limbo as to whether or not they would be able to utilise them. Ultimately the majority of vouchers were indeed honoured but in the case of Jessops for example, consumers with vouchers reaching a combined total of over £500,000 never got their money back. This example comes as a severe warning to customers wanting to purchase gift vouchers as presents this Christmas. In short, if a company goes out of business there is no guarantee that the consumer will have their voucher honoured.

The current situation is that when a company enters serious financial difficulties voucher holders are relatively low down on the list of creditors and it is only really people holding shares in the company who are likely to get their money back. Voucher holders currently sit on the 5th tier of creditors alongside the likes of HMRC and suppliers.  The decision as to whether gift cards will be honoured really depends upon the attitude of the Administrator (if he is trading the business) or any purchaser of the assets of the insolvent Company may agree to honour them to preserve customer goodwill.

The current advice for consumers is to pay attention to the news and current affairs and take notice of any companies experiencing financial difficulties. It is likely that some companies will experience similar problems to those experienced by companies around Christmas 2012. The UK Gift Card and Voucher Association has sent out a warning to consumers to carefully consider where they are purchasing vouchers from. If you are buying over £100 worth of vouchers then it is advisable to use a credit card as this will ensure half is protected by the credit card company and half by the retailer.

If you have been affected by any of the above issues then do not hesitate to contact us today to speak to one of our specialist solicitors who will be able to advise you further.

By Ian Liddle, Corporate Insolvency Lawyer