Consumer Advisory
(Montgomery Ward Bankruptcy)

A company that has filed for bankruptcy or is going out of business may be offering what looks like good deals, but you should be aware that new restrictions will apply to your purchases. This advisory seeks to provide some helpful information on the impact of the Chapter 11 bankruptcy filing by Montgomery Ward, LLC (Ward) on consumers, but is not intended as legal advice.

Montgomery Ward filed for Chapter 11 bankruptcy on December 28, 2000. A Chapter 11 bankruptcy usually means the company is seeking protection from creditors, while it reorganizes or looks for additional funding. In this instance, Montgomery Ward has said it plans to close all of its 250 stores and 10 distribution centers nationwide and liquidate its assets.

As a result of the bankruptcy filing, Wards is in the process of selling all of its merchandise and any payments made by the company must be approved by the bankruptcy court. The company will not pay cash for returned merchandise, gift certificates, merchandise certificates, or credit card rebate certificates.

If you have store certificates, you can use them for merchandise. Wards has announced that the certificates will be honored for stock on hand until January 31, 2001. If you want cash, you can file a claim with the Bankruptcy Court and wait until the case is settled. It is uncertain how much money will be available for distribution. Consumers generally are unsecured creditors, who would be considered last for payments through the court.

Here are some things to keep in mind:

• Comparison Shop. As is true with most liquidation sales, comparison shop. This will help you to know if the in-store discounts are a good deal. While the posted discounts may be accurate, the store will be hiring liquidation specialists whose job is to sell the merchandise for the highest profits possible so creditors can be paid. All sales will be final.
  
• Use Store Vouchers As Soon As Possible. A customer who has paid cash for merchandise which Wards cannot supply will receive upon request a credit voucher for other products. This voucher should be used as soon as possible since merchandise is likely to be limited and the store plans to close its doors for good.
  
• Credit Card Purchases May Be Voided. If Wards does not have the goods you bought using any credit card, you can ask your credit card company to cancel the transaction. You should call your credit card company with your protest. You also should write your credit card company as soon as possible with this protest since written notices generally must be provided within 60 days of the charge. You can learn more about your credit card rights in the pamphlet, "Your Credit Card Chargeback Rights."
  
• Manufacturer Warranty Restrictions. If the product you bought was made by a company other than Wards, your warranty should be honored by that manufacturer. However, warranties sold under the Wards name will not be honored by Wards. You may wish to ask the store who makes a Wards brand product and contact that manufacturer to determine if it will honor the Wards warranty.
  
• Extended Warranty Restrictions May Apply. Check your service contracts, otherwise known as extended warranties, to see if it is in the name of Wards or another company. Service contracts issued in the name of another company should be honored. As a result of the bankruptcy, you will lose any extended warranty coverage issued in the name of Wards with Wards providing repair services. You may wish to ask Wards about any rebates being given for service contracts.