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Bankrupt Tweeter Persuaded to Honor Gift Certificates

State Attorneys General strong-arm retailer to make good on its deals

November 19, 2008
When electronics retailer Tweeter entered bankruptcy, it told consumers it would not be able to honor gift certificates after November 15, 2008. Several attorneys general had other ideas.

Maryland Attorney General Douglas F. Gansler said Tweeter had in fact agreed to honor customer gift certificates throughout the duration of its store closing sales.

Tweeter, which has seven Maryland stores, filed Chapter 11 bankruptcy in Delaware on November 5, 2008. The Attorney General's Office, which was joined by the Attorneys General of Connecticut and Illinois and the Georgia Governor's Office of Consumer Protection, filed an objection to Tweeter's proposal to honor gift certificates only through November 15th and sought to honor deposits made by consumers who ordered merchandise prior to the bankruptcy filing. Tweeter this week agreed to honor gift certificates through the duration of its store closing sales.

"I'm pleased that we were able to ensure that consumers with gift certificates will be able to use them," Gansler said.

Gansler said consumers holding Tweeter gift cards and certificates should make sure they use them before the stores close, which is likely to be by the end of the year.

The Bankruptcy Court, however, did not require Tweeter to honor consumer deposits during the sale. Gansler says consumers who made deposits for merchandise they have not received should contact their credit card company to reverse the charges or, if they paid by another method or are otherwise unable to reverse the charges, to file a claim with the Delaware Bankruptcy Court.

Consumer deposits up to $2,425 have a priority over other general unsecured claims in bankruptcy. Proof of claim forms and instructions are available on the Court's website, www.deb.uscourts.gov, or may be obtained by contacting the clerk's office at 302-252-2887.

Gansler also encouraged consumers thinking that they will be getting bargains by shopping at store closing sales to compare actual prices among different retailers rather than percent off claims and to be aware that they may not be able to return the merchandise or seek warranty coverage from stores that are no longer in business.

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