$2.3M in claims filed against gift certificate co.
DAYTON, Ohio — More than 1,100 claims seeking about $2.3 million in compensation have been filed against an Ohio gift certificate company that filed for bankruptcy in April.
CertifiChecks Inc. sold gift certificates to thousands of businesses and individuals nationwide. The certificates — worth anywhere from $5 to $100 or more — were popular with chambers of commerce that sold them to the public to promote local restaurants and retailers.
Tuesday was the deadline for seeking compensation from the Dayton-based company, which closed Feb. 26 and filed for Chapter 7 bankruptcy April 13. A total of 1,167 claims had been filed as of last Friday, according to the court-appointed trustee. About $279,000 is currently available to pay the claims and administrative costs.
Declining sales, a long-standing policy of honoring expired gift certificates and a rush by the public to redeem certificates amid a deteriorating economy led to the failure, said Steven Buchholz, the company’s founder and president.
The company stopped honoring expired gift certificates in the spring of 2008, but not before allowing $3 million worth to be redeemed in the two previous years, Buchholz said. He said that the company would still be in business if it had been firm in 2004 and 2005 about not honoring expired certificates.
Sales fell in the fourth quarter of 2008 and the rush to redeem gift certificates cost the company a major source of revenue.
“Just look around,” Buchholz said. “We were a casualty of the great recession.”
Going into 2009, the company planned to operate on a month-by-month basis, Buchholz said. January went fine, but sales were off perhaps 40 percent in February compared with a year earlier.
Buchholz said he filed for bankruptcy to try to preserve any remaining assets to help reimburse certificate holders. He estimated that the company would have run out of money in September.
The company’s closing put 28 employees out of work.
Becky Nelson, of the Dayton suburb of Centerville, said she didn’t use a $150 gift certificate before the company closed.
“Lesson learned,” she said. “Whenever you get a gift certificate, use it right away.”
Nelson said she has filed a claim, but doubts she will receive any compensation.
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