Texas Sues Over RadioShack Gift Cards

Don’t mess with Texas—especially not with its shoppers.

As we reported, Texas Attorney General Ken Paxton on Thursday sued RadioShack in bankruptcy court over approximately $43 million in unused gift cards.

In the lawsuit, Mr. Paxton says the retailer hasn’t notified gift-card holders that they need to file claims in bankruptcy in order to be repaid for the cards. He wants to the right to file such claims on behalf of Texas residents, a right he says should be extended to other states’ attorneys general. He also wants the claims to be given priority status when it comes time to dole out payments.

A RadioShack bankruptcy attorney couldn’t immediately be reached for comment on the lawsuit, which isn’t Mr. Paxton’s first bankruptcy rodeo. Earlier this year, he was among the state officials who challenged RadioShack’s bid to sell its trove of customer data. The sale ultimately included a more limited amount of data under a deal the retailer cut with the attorneys general.

Gift cards always seem to cause trouble when a retailer files for bankruptcy, as companies don’t have to honor them. And those that do typically only do so for a short time, until they close up shop or find a new owner. Then customers have to file claims for the unused cards, and the means by which companies get the word out is where problems arise—just ask former customers of Sharper Image and Borders.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ