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9 Apr 2019

Debenhams parent group in administration: what customers need to know

What Debenhams going bust means for gift cards and returns

The ultimate parent group of high street retailer Debenhams has entered administration but the doors to its 166 stores are still open.

The company which operates the Debenhams department stores is now under new ownership and is trading as normal.

A message on the store's site says all orders, returns, refunds and gift cards are being honoured.

Debenhams' ultimate parent company collapsed into administration on Tuesday after two bids from Sports Direct failed.

As always, anyone with a Debenhams gift card should make sure they spend it before it expires.

What Debenhams customers need to know

The department store itself remains unaffected and will continue to accept gift cards and returns.

The parent company has confirmed to Which? that it's business as usual for the department store's staff and customers.

Which? Consumer Rights editor, Eleanor Snow, said: 'Gift vouchers tend to have expiry dates - we've found in the past some vouchers with other retailers valid for as little as eight weeks, and we know that millions of pounds are wasted each year on lapsed vouchers.

'Our advice in any scenario is always to spend them while you can.'

What happens to Debenhams now?

The shares owned by the main parent company have been sold to its lenders, but it's not yet clear what the lenders hope to do with the operational businesses.

The department store has been struggling for a while - last year Debenhams issued three profit warnings and reported a pre-tax loss of £491.5m.

The retailer blamed a profound change in shopping habits, bad weather and a slump in sales over the Christmas period.

Sports Direct tycoon Mike Ashley, who gradually bought 30% of Debenhams Plc shares, entered two bids for the retailer to save it from collapse on the condition he was made CEO.

The bids were rejected. Debenhams said the offers were highly conditional.

What happens when a retailer goes bust?

Even though Debenhams stores are unaffected, if you are concerned you should spend any gift cards as quickly as possible.

As with any larger purchases, if you are planning to buy something for more than £100, make sure you use a credit card so you can make claim against your credit card company under Section 75 if something goes wrong.

If a retailer goes bust, it's up to the administrator whether they will honour returns or gift cards even if it continues trading.

If you have a faulty product, you might still be able to get a refund, repair or replacement under the Consumer Rights Act while the store is still trading.

If it ceases trading, you'll need to make a claim as an unsecured creditor which means it's unlikely you'll get your money back.