Saturday, January 03, 2009

Zavvi gift cards: the gift that just stops giving

There's some rumours circulating about strange goings-on with Zavvi gift vouchers; even talk of a mysterious secret account into which gift voucher sales were diverted.

As with most rumours, there's a slight element of truth: there was a protected account, but it wasn't secret:

As soon as the Directors became aware of the problems with EUK (27th November 2008), zavvi's main supplier, they sought to protect customer interests by lodging funds into a trust account. Until this time the Directors had no reason to believe there would be any issue regarding the sale of Gift Cards / Gift Vouchers from their stores. The sale of Gift Cards / Gift Vouchers was terminated on 4th December 2008. It is hoped that customers who purchased zavvi Gift Cards / Gift Vouchers from 27th November 2008 will receive a refund in respect of these Gift Cards / Gift Vouchers.

So, from the 27th of November, the money that people spent in good faith on Zavvi gift vouchers was being protected. The wider question, though, might be why - if the adminstrators were nervous enough to think there might be a problem on the 27th, it wasn't until the 4th of December that they actually stopped selling the vouchers at all? How is it "protecting customer interests" by selling a product they had good reason to suspect might be worthless?

Still, if you bought the vouchers in this period, at least you'll get your money back. Older Zavvi voucher holders will just have to join the queue with all the other unsecured creditors.

[Thanks to Michael M]


James said...

Zavvi only went into administration on 24/12/08, at the time the bank account was set up by the company directors.

Although by no means the only reason for the company struggling, the main push came from EUK going into administration as part of the Woolworths group. It was at this point, when stock deliveries were halted, that money started being diverted into a separate account for gift cards. The company were still hopeful that stock could be sourced direct from suppliers and zavvi could continue to trade. A week later it was starting to look like this would be harder than previously thought, so after advice from Ernst & Young (then only appointed to offer advice), gift card sales were stopped.

James (different one) said...

I popped into Zavvi during a trip to Oxford today. Just look at the crazy price-slashing that's going on! It's like they can't get rid of stuff quick enough. Madness! (Alright, it's not Madness, it's Lou Reed, but you get the idea).

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