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RadioShack gift card court battle nears resolution with $40M settlement

Defunct retailer agrees to plan to refund a good number of consumers holding valueless cards.

August 27, 2015

Customers lugging around unredeemed RadioShack gift cards are likely to get repaid in full if a proposed lawsuit settlement deal with the Texas attorney general proves successful.

The now-bankrupt retailer was sued by Texas and several other states regarding the now valueless gift cards. The settlement, according to a Wall Street Journal report, is being hailed as "very, very favorable" for gift-card holders, by RadioShack attorney Gregory Gordon. The suit requested consumer card holders be paid ahead of RadioShack’s other creditors. The Texas attorney general's office told the WSJthe settlement is "eminently fair to consumers."

RadioShack is currently working to conclude its chapter 11 bankruptcy strategy. As part of the settlement deal, consumers with gift card will have 12 months to file a claim for a refund payment instead of an initial 60-day proposal. The WSJreport stated the court’s final approval on the agreement should come in September.

Yet, as a CBSreport notes, not every gift-card holder will be paid in full, as repayment will be done based on how the consumer received the gift card. Those who bought cards for their own use or someone else will have priority repayment status, as will those who have re-loaded cards. But those holding cards doled out during promotional giveaways or opted for a gift card in a merchandise return scenario are at the back of the repayment line, with RadioShack’s other unsecured creditors.