Riverview father Rudy Walters is talking out after Mastermind Toys stopped accepting reward playing cards efficient Christmas Day — with indicators posted on their storefronts solely days earlier than.
Walters stated the transfer raises questions in regards to the worth of reward playing cards and about client safety when an organization comparable to Mastermind heads towards chapter.
The transfer is part of the retailer’s current submitting for creditor safety amid growing competitors, COVID-19-related disruptions and a lower in buyer spending. The choice to not honor reward playing cards is, in keeping with the notices on the shops, “pursuant to the CCAA courtroom course of.”
In response to CCAA courtroom proceding paperwork, the corporate at present has “roughly $5.6 million in excellent reward card liabilities.”
Walters stated the timing can be poor.
“Particularly to have that deadline be Dec. 24, understanding what number of households can be solely opening up reward playing cards on the twenty fifth,” Walters stated.
“What number of of those reward playing cards may nonetheless be in transit with Canada Put up or one other service?”
Fredericton lawyer Romain Viel, who works in industrial litigation, stated the choice to invalidate reward playing cards is really useful by insolvency professionals and accepted by courts to offer companies an opportunity to prepare their monetary affairs.
“Usually, should you’re in insolvency proceedings it is as a result of the cash going out is extra vital than the cash coming in,” Viel stated.
“So by freezing reward card liabilities, it offers the enterprise a chance to reorganize itself financially, repay key collectors, in order that, for instance, the financial institution does not are available in and foreclose on its properties or take over leases,” he stated.
The supposed result’s collectors getting paid as a lot as they probably can with reward card holders falling in second place. This leaves shoppers with reward playing cards hanging within the lurch.
Few protections for reward card holders
Earlier within the month, the retailer reached a deal to promote the majority of its enterprise to Unity Acquisitions, an organization run by Joe Mimran, Frank Rocchetti and David Lui.
Whereas the deal is predicted to shut in January, in earlier statements to CBC Information, firm spokesperson David Ryan stated he couldn’t verify if reward playing cards can be accepted once more as soon as that occurs.
Viel stated there may be nothing that claims reward playing cards need to be revered as soon as the deal is closed.
“The way in which it stands now could be that with no additional courtroom order, the reward playing cards don’t have to be revered,” he stated.
“So when the gross sales course of is lastly accepted, there could also be one other courtroom order” to deal particularly with reward playing cards.
In New Brunswick, expiration dates on reward playing cards are prohibited by the province’s Monetary and Shopper Providers Commissions’ Present Card Act. There are some exceptions, comparable to reward playing cards for a selected good or service — like a present card for a manicure, for instance — promotional reward playing cards or playing cards provided for charitable providers.
Are reward playing cards definitely worth the danger?
Very like Walters, who himself tries to avoid reward playing cards, Viel stated reward playing cards are a danger as there may be at all times an opportunity that an organization may face monetary challenges, particularly with inflationary pressures and financial results of COVID-19.
“It is a danger to purchase reward playing cards,” stated Viel.
“There’s at all times going to be that [chance] who you are coping with might or is probably not round in a yr or two,” he stated.
Whereas he thinks there may be robust client safety within the province, Viel stated with out extra focused reward card laws in chapter circumstances, “reward card holders are type of caught.”
“Clearly, if I had been to discover a Sears reward card in my dresser proper now, I might know that will have completely no worth,” stated Walters.
However with a Mastermind reward card,”if I can go there and spend my cash, I ought to be capable to go there and spend a present card as effectively,” he stated.
Mastermind is at present slated to shut 18 of its 66 shops — 9 in Ontario, 4 in Alberta, and one every in B.C., Nova Scotia and Manitoba.
In New Brunswick, the shops in Fredericton and Saint John will shut on Jan. 7 and Jan. 10 respectively.
Mastermind Toys, which has been working since 1983, didn’t reply to requests for remark or interview.
