Fears of a potential bankruptcy restructuring at the iconic luxury retailer Saks Fifth Avenue have triggered a rush among shoppers, particularly American Express Platinum cardholders, to spend their store credits and gift cards. The looming uncertainty has left consumers worried about being left empty-handed if the company files for court protection.
The Rush to Redeem: Amex Benefits and Gift Cards in Limbo
The situation directly impacts premium credit card benefits. Julia Portela, a 38-year-old travel content creator based in Miami, exemplifies this concern. Her American Express Platinum card, which carries an annual fee of $895, includes a popular perk: a $50 credit at Saks Fifth Avenue twice a year. With the retailer's financial troubles making headlines, Portela and many others are hurrying to use these credits.
"Everyone is going to try to go to Saks," Portela stated, highlighting the widespread anxiety. "We don't know what can happen." American Express has millions of cardholders globally but does not disclose how many hold the Platinum version. The company has stated that the Saks benefit currently remains unchanged.
Portela's concerns are compounded by the $300 in Saks gift cards she also holds. She runs a WhatsApp chat for travel tips with over 100 members, where the bankruptcy news is a hot topic. She has also been flooded with messages from fellow travel influencers urging her to cash out her Saks gift cards immediately.
Bankruptcy Realities: Will Saks Honour the Cards?
According to legal experts, the customer rush is a classic response to financial uncertainty. Edward Morrison, a Columbia University law professor and bankruptcy expert, compared it to a "run on the bank." He noted, "Saks is potentially feeling the drain on its resources as the goods are coming out now via the gift cards."
However, Morrison pointed out that Saks has strong incentives to protect its brand by honouring gift cards and credits. While a retailer can advocate for customers in bankruptcy court, the final decision rests with the judge. Under Chapter 11 bankruptcy, which allows a company to restructure its debt, courts have the power to determine whether gift cards must be honoured.
"There's a high probability that Saks will honour these things in bankruptcy," Morrison assessed. But he added a crucial caveat: "Given the uncertainty, it's rational for customers to use those cards now."
Lessons from Past Retail Bankruptcies
History shows that retailers have handled gift cards in various ways during bankruptcy proceedings, offering little consistency for worried consumers.
- Joann Inc., the craft store chain, stopped accepting gift cards online and halted refunds and returns just two weeks after receiving court approval for its bankruptcy last year.
- In a more extreme 2008 case, Sharper Image imposed strict conditions, requiring shoppers to spend their entire gift card balance in a single visit and mandating that the purchase amount be double the card's value.
These precedents underscore the risk consumers face. A representative for Saks Global Enterprises, the owner of the retailer, did not respond to requests for comment on the current situation, leaving cardholders and gift card owners in a state of suspense.
For now, the advice from influencers and experts alike is clear: if you have a Saks credit or gift card, using it sooner rather than later might be the safest financial move.
