Ordinarily, anyone with gift vouchers is classed as an unsecured creditor of a business until they are spent. If a company goes into liquidation, those owners of the gift vouchers have to join the long line of people owed money by the failing company “ with little or no guarantee of seeing any money. However
angry HMV customers had reacted badly to being prevented from spending the gift vouchers in store, leading to
administrators Deloitte reassessing the situation and agreeing to honor them. In the process, Deloitte also agreed to honor all charitable payments that were still outstanding.
The change of heart by the administrators will be particularly welcome for the thousands of people who received
HMV gift cards at Christmas, not to mention the recipients of the funds raised for the victims of the
Hillsborough disaster. The Christmas single He Ain't Heavy, He's My Brother by The Justice Collective was sold through HMV after its launch at the Liverpool store, and raised
£150,000 .
Nick Edwards, who has been appointed
Joint Administrator for the chain, said: "I am pleased to confirm that, having concluded this assessment, we are able to honor gift cards. I can also confirm that all money raised by HMV for various charities will be paid in full," said. "We recognise that both of these matters have caused concern for individuals and organisations affected and are pleased to have reached a positive outcome."
When a company finds itself in dire straits,
Financial Administrators have the power to change some of the normal procedures associated with dealing with the collapse of a business, including having the discretion to allow gift vouchers to be used and charitable commitments to be honored. However they are under no obligation to do so.
In this case, the administrators were able to do so relatively swiftly as HMV is not under new ownership, however retail experts suggest that owners of HMV gift vouchers should spend them as quickly as possible in case an offer is made to buy the business. This could put customers back to a situation where their gift vouchers
may not be honored by the new owners as they would not be under any legal obligation to do so.
A spokesperson for
IVA Company IVAOnline.co.uk said: œIt's fantastic news that HMV's administrators have decided to honor the
millions of pounds of gift vouchers that haven't been redeemed yet, many which were Christmas gifts.
œChristmas was a very hard time for many people, and being able to find the money for gifts wasn't easy. To give a gift and then have the recipient not be able to use it caused a lot of
embarrassment and guilt among consumers, some of who may have felt obliged to replace the gift. Thankfully, in this case the right decision has been made and hopefully customers will redeem their vouchers as quickly as possible.
