Another retailer files for bankruptcy

Home furnishing specialty retailer Linens ’n Things has become the latest chain to file for Chapter 11 bankruptcy protection.

Linens Holding Co., based in Clifton, N.J., filed a petition (PDF download) in U.S. Bankruptcy Court in Delaware on May 2. Under the Chapter 11 filing, the company is seeking to restructure its operations with the goal of staying in business. The good news is that Linens ‘n Things has obtained court approval to fully honor its gift cards, rewards certificates, coupons and merchant rebates, and existing return and exchange policies.

That contrasts with the recent Chapter 11 bankruptcy filing by Sharper Image. The San Francisco-based specialty retailer, which initially stopped accepting gift cards and certificates altogether, later obtained court approval to accept them only if shoppers redeem them in full and for purchases that equal at least twice the value of the card or certificate.

Although there are no restrictions on the use of Linens 'n Things gift cards and similar obligations at this time, it’s a good idea to use them as soon as possible, just in case. In fact, you should use any retailer’s gift cards, merchandise certificates, and other obligations as soon as you can, especially during a bad economy that already has claimed such retailers as Bombay, Levitz, and Domain. The risk of a store going under one reason among many to avoid buying gift cards in the first place.

As of Dec. 29, Linens 'n Things operated 589 stores in 47 states and seven Canadian provinces. The Canadian stores are not part of the bankruptcy filing. The company said it plans to close 120 underperforming stores. It blamed its poor financial performance largely on “significant deterioration in the mortgage, housing, and credit markets.”--Anthony Giorgianni