Texas seeks priority status in bankruptcy for unredeemed RadioShack gift cards

The state of Texas has entered the RadioShack bankruptcy case once again, this time over gift cards.

In a court filing Thursday, Attorney General Ken Paxton asked the Delaware judge to provide holders of an estimated $43 million in gift cards priority status to collect and asked that the state be granted permission to file a claim on behalf of its citizens for any amount not redeemed.

According to the filing, the RadioShack gift cards did not list an expiration date and the company continued to tell customers after filing for bankruptcy that they do not expire. But in court proceedings, an expiration date of March 31 was established for redemption.

The state contends that RadioShack made no effort to provide cardholders with information on how to file a claim in bankruptcy court for any unredeemed amount. Now, the company should not be allowed to distribute the consumer funds to other creditors, the state contends.

The Fort Worth-based retailer is trying to wind down its bankruptcy case, which was filed in February. RadioShack has closed more than half of the 4,000-plus stores that were open before it entered bankruptcy, but more than 1,700 stores continue to operate after their sale to the New York hedge fund Standard General.

The state says it asked RadioShack to produce a state-by-state breakdown of the quantity and dollar amounts of unredeemed gift cards, but the company said it did not know who holds them.

“Texas respectfully contends that such an assertion must be viewed with some skepticism in light of the fact that [RadioShack officials] maintain extensive data regarding their customers’ purchases,” the filing states. “The Defendants likely know the names, mailing addresses, and email addresses of at least some of the purchasers if not the holders.”

Earlier in the case, Paxton led a group of state attorneys general opposing a plan to sell personal data on 117 million customers. The two sides eventually reached an agreement to destroy much of the data and not give the company’s new owner access to credit card data or Social Security numbers.

Any gift card funds remaining after bankruptcy claims are made should be returned to states as unclaimed property, the filing asserts.

This story was originally published June 18, 2015 at 4:40 PM with the headline "Texas seeks priority status in bankruptcy for unredeemed RadioShack gift cards."