Are Hmv And Jessops Breaking The Law Not Honouring Gift Vouchers?

[barney15c]

Too late for Jessops but HMV are still trading, but both refused to honour gift vouchers. As they have had the money surely they are breaking the law not honouring them, also were they being deceptive selling them when they must have known they were both going to the wall?

[Canary42]

That's the advantage of being a plc (public LIMITED company) - liability is limited. The Directors take the money and run - then do it all over again with another company.

It's called capitalism.

[Buenchico]

It actually would be illegal for the administrators to honour the gift vouchers at the present time.

The law regards gift vouchers as a debt owed by HMV (or whoever).

When a firm goes in receivership all creditors must, by law, be treated equally (unless they're 'preferred creditors', such as the tax man). It's illegal for the firm (or its receiver) to pay out one creditor in favour of another. So all creditors must contact the receiver to stake a claim for a piece of whatever's left in the kitty.

'Administration' is an interim phase (which some firms successfully come out of, without going into receivership) but, during that phase, the administrator is again legally barred from giving preferential treatment to the holders of gift vouchers over others to whom the firm owes money.

Chris

[jake-the-peg]

Do we think that perhaps the law needs to be changed such that if a company is still trading under administration as HMV is that gift vouchers should have to be honoured?

Is there some significant bar to this?

[barney15c]

I don't know if each case has to be taken on its own merits, but i'm pretty sure Comet did honour gift vouchers.

[barney15c]

Also as an aside...could people in future be reluctant to buy gift vouchers given the parlous state of retail firms.

[Old_Geezer]

Knowing retailers are allowed to print use by days on them these days, effectively saying they'll steal the money by giving nothing in return if you don't jump through their date hoop, I can quite believe the vouchers can be refused. A while ago I was desperate to use up a lot of Comet ones I had before they showed real problems. Besides, as stated by Buenchico, in this case it is debt, and as anyone caught in this sort of situation can testify, customers get no priority, only the big companies get first bite of anythinng going.

[DTCwordfan]

they are a debt on the balance sheet - what's the difference between someone holding a voucher/card and a small business person who has provided a service to them - there isn't.

Comet accepted them after the cries of outrage but that was technically illegal.

[Buenchico]

>>>could people in future be reluctant to buy gift vouchers given the parlous state of retail firms.

The solution is to buy a One4All Gift Card. They could (until recent events) have been used in HMV but they won't lose their value unless ALL of these retailers go bust together (which doesn't seem to be very likely!):
http://www.postoffice.co.uk/one4all-gift-card#where_to_spend

One4All Gift Cards are sold at all Post Office branches.

[jake-the-peg]

The difference is that one is a commercial transaction and the other a retail transaction

There are numerous differences between the two types of transactions as evidenced by the many pieces of consumer protection legislation

[dzug2]

Well it might make it slightly more likely that a company will decide to go bust rather than try for administration.

[chas2008]

technically speaking its illegal to trade insolvent and most companies before they finally go down the toilet do for as long as they can keep the door open,(this can be up to 6-12 months), ie selling gift vouchers.
Unfortunately the law in this country doesnt seem to bothered about it..

Under wrongful trading legislation in the UK, if the company continues to trade while it is insolvent the directors of the company may become personally liable to contribute to the company's assets and help meet the deficit to unsecured creditors if the company's financial position is made worse by the directors continuing to trade instead of putting the company immediately into liquidation.

[Ann]

Gosh I just hope the fashion chain H&M isn't in trouble - I gave my nieces gift vouchers for Christmas which they haven't been able to spend yet.

[dotty.]

the majority of HMV vouchers and giftcards bought in this country are purchased from third party retailers who are given a percentage fee for stocking and selling them. HMV have not had any money for them.

[jno]

Hopkirk did warn everyone before Christmas

http://www.theanswerbank.co.uk/ChatterBank/Question1197016.html

Ann, H&M seem to be okay

http://www.cityam.com/latest-news/retailer-hm-s-likes-ease-worries

[Ann]

Thanks for that link jno .....

[Buenchico]

. . . and I was predicting the closure of HMV stores 2 years ago!
http://www.theanswerbank.co.uk/ChatterBank/Question981616.html#answer-5566156
(See my post at 0019)

[joeluke]

'the majority of HMV vouchers and giftcards bought in this country are purchased from third party retailers who are given a percentage fee for stocking and selling them. HMV have not had any money for them.'

So if you had bought a HMV voucher from say Tesco, could you take it back to Tesco for a refund because they are the agent and the item you have bought is faulty and cannot be used?

[murraymints]

is the on line site also going ?

[Buenchico]

No, Joe, because the Sale of Goods Act 1979 only applies to 'goods', not to 'financial securities'.

[Buenchico]

MM:
The HMV website seems to answer your question:
http://hmv.com