David Jones entered voluntary administration and receivership, with customers flocking to stores to redeem gift cards after the news broke. At the Highpoint Shopping Centre location in Melbourne's west, shoppers lined up to spend their balances, ABC News reported.
One shopper, Pauline Ricotta, came with a $300 gift card that had been sitting unused for a year. Another, Sonya, brought $450 worth of gift cards and changed plans to use them immediately rather than wait for Black.
FTI Consulting's Christopher Hill, David McGrath and Joanne Dunn were named as receivers and managers. The administrators and receivers said the business would continue trading while operations were reviewed, describing the process as providing breathing space and an opportunity to restructure. Erica Berchtold said David Jones had a prepared plan for resetting the business and that management would work alongside the administrators, receivers and secured lender toward that goal.
Erin Turner of the Consumer Policy Research Centre warned that if David Jones were wound up, gift card holders would be treated as unsecured creditors, ranked behind other creditors, and could lose the value on their cards. She advised those with David Jones rewards points to try to spend them quickly.
Turner recommended using a physical store rather than buying online, noting that an online purchase would likely be fulfilled but that there was a chance of delays or issues. During Dick Smith's 2016 receivership, neither deposits on goods nor gift vouchers were refunded or honoured.
He gave the example of Barbeques Galore, where the administrator honoured gift cards but required a further purchase on top of the gift card value. At the Highpoint store, staff were clearing some shelves while stock levels on others were low.
Latitude, the finance company that provides David Jones credit cards, stopped accepting applications for new cards. A Latitude spokesperson stated that existing cardholders were not affected and could keep using their cards. He also noted the possibility that stock could be sold off to a liquidator rather than through in-store sales, so discounts were not guaranteed.
Angus Kidman, a shopping expert at Finder, cautioned people purchasing Christmas presents at David Jones to consider that the store may no longer be operating in January if an exchange or refund was needed. Turner, along with other consumer advocates, has argued that money loaded onto gift cards should be kept in trust so holders are not left without recourse if a business collapses.
People holding David Jones gift cards or rewards points face uncertainty about whether those balances will be honoured. If the 188-year-old department store chain is wound up, gift card holders would rank as unsecured creditors and could recover nothing from their card balances. Consumers who make purchases now may find that return and exchange rights change if the business changes hands.
Reporting: ABC News, Yahoo Finance
Background: SmartCompany
Written by Pick & Scroll News from the reporting and documents linked above.
