Why did PW lock thread about Stacy's gift cards?
Original post made by downtown shopper on Jan 7, 2011
1. the diner should have asked before eating (or even before showing up) if the gift cards would be accepted.
2. the restaurant should post the policy as not everyone knows there was an ownership change without a name change
When the business was sold there was a transfer of assets and/or liabilities. The liability for gift certs that was carried on the books would have been part of the transaction. Therefore, the new owner should honor those certs. He already constructively received the funds. It is not good service to decide not to honor outstanding gift certs and as the owner can see, word does get around in this town.
And PW, if you lock this thread also could you please say why?
on Jan 9, 2011 at 9:27 am
The current operator of Stacey's Cafe purchased only the assets of the business, including the name. That's a common practice. Purchasing the liabilities was never a practical option.
As the seller, I assumed that the flow of gift card use would be minimal, and since only the food/bev costs are incremental to the business, the new owner would honor them as a convenience to customers, and to maintain goodwill.
The actual flow of gift cards redeemed is apparently more than anticipated, putting a considerable strain on the new business. You might have noticed a number of restaurants closing recently (Bing Crosby in Walnut Creek for example). This is a new era.
I'm in discussions with the current owner to work something out for the gift cards that were outstanding before the asset sale. If you check back with the restaurant in a month or so, you should get a good answer.
I hope everyone understands that all small businesses are making hard choices to survive. I hope you give some thought to the hard working employees of Stacey's Cafe who do a great job.
I apologize for the inconvenience and confusion. I understand how annoying that must be.
on Jan 10, 2011 at 12:53 pm
When a gift card is purchased, it creates an asset on the books of the business along side a liability of "owing" that meal to the person that holds the gift card.
While it's nice to say that the new owners did not in effect purchase the liability of the gift cards, the previous owner did receive the asset of cash.
It would be the same as if the new owner didn't elect to pay for the delivery of raw food items that have an outstanding bill.
Convenient for both old owner and new owner to neglect to deal with this liability for which they have already received as an asset.
The last owner of Mahalo Grille pulled the same thing and let us with $150 in unusable gift certificates. He gave us a letter from the lawyer and recommended we go down the block to Pasta's to attempt to collect from the previous owner.
The value of gift cards outstanding should be a consideration in any sale of a business that will be continuing!!!!!
Bad business decision on both parties part with the transfer of ownership of Stacy's.
on Jan 10, 2011 at 2:06 pm
Stacey is a registered user.
I tried to look up about this. California law basically provides that the gift card/certificate has to be honored by someone, either the new owner or the former owner. From what I could tell, only a Chapter 7 bankruptcy could sever the obligation. Some sites said new owners purchase only the assets of the business. Other sites said that both assets and liabilities are included in a purchase. It probably depends upon what the contract of sale said.
This kind of thing shows how important it is for proper accounting of gift certificates and cards by a business owner. I do not think gift cards would be counted as an asset. Perhaps the Chamber of Commerce could provide some information on this.
Pick & Choose,
Did you try filing in small claims court against the previous owner?