Attorney General Becerra Highlights Consumer Rights and Resources in Response to Recent Business Bankruptcies During the COVID-19 Pandemic

Thursday, June 11, 2020
Contact: (916) 210-6000,

SACRAMENTO – Attorney General Xavier Becerra today provided important information and resources regarding business bankruptcies and consumer rights amidst the COVID-19 pandemic. Families, businesses and communities throughout the country are facing unprecedented financial strain as a result of the public health emergency. The economic impact of the pandemic has caused many companies – such as J.C. Penny, J. Crew, Dean & Deluca, Gold’s Gym, Hertz, and California-based businesses such as those that operate the family entertainment center “Boomers!” and the popular children’s camp “Camp Galileo” – to file for bankruptcy. The economic climate continues to be challenging for businesses, and consumers should know their rights during these trying times.

“Consumers have rights when a business fails,” said Attorney General Becerra. “Bankruptcy does not grant debtor companies blanket freedom from their commitments and obligations to their customers and creditors. I urge California consumers to know their rights.”

Consumer Bankruptcy Rights

  • Are my gift certificates issued by the business now worthless? They shouldn’t be. California law specifically protects gift certificates. Money paid for a gift certificate belongs to you, not the business. (Civ. Code, § 1749.6, subd. (a).) A business must continue to honor your gift certificates, even if it files bankruptcy. (Civ. Code, § 1749.6, subd. (b).)
  • What happens to my money if I paid ahead or put down a deposit for something the business hasn’t yet delivered to me? To protect consumers, the Bankruptcy Code provides consumers with a “priority” claim of up to $3,025 for a deposit put down on undelivered consumer products or services. (11 U.S.C. § 507(a)(7).) Although this doesn’t necessarily mean that you will get all your money back from a bankrupt business that closes for good, it does mean that you are generally entitled to be repaid up to $3,025 if a business continues to stay open after bankruptcy. (11 U.S.C. § 1129(a)(9)(B).)

General Bankruptcy Information for Consumers

  • If a business that owes money to consumers files for bankruptcy, consumers should consider submitting a “Proof of Claim” in the bankruptcy. This is a simple, three-page form that asks you to provide information about why you are owed money. A template Proof of Claim is available here. If a business is holding consumer deposits at the time it files bankruptcy, consumers who are owed money on account of those deposits should consider checking box 12 (regarding priority claims) and the box next to the phrase “Up to $3,025* of deposits toward purchase, lease, or rental of property or services for personal, family, or household use. 11 U.S.C. § 507(a)(7).” 
  • Consumers who are owed money may automatically receive bankruptcy notices about deadlines and hearings, but this does not always happen. Bankrupt businesses usually set up websites to provide information to the public about the bankruptcy. These websites often include important information about upcoming dates, allow consumers to file a Proof of Claim, and provide phone numbers and email addresses to seek additional information. An internet search can help locate these websites. For example, you can click the following links to access the websites for the bankruptcies mentioned above: J.C. PennyJ. CrewDean & DelucaGold’s GymHertz; Boomers!; and Camp Galileo

Additional Consumer Resources

Information and forms for creditors are provided by the Bankruptcy Courts throughout California; you can find that information here for the Central District (headquartered in Los Angeles), here for the Northern District (headquartered in San Francisco), here for the Southern District (headquartered in San Diego), and here for the Eastern District (headquartered in Sacramento). Resources and help for those without an attorney can be found here for the Central District and here for the Northern District. Please note that due to COVID-19, schedules are subject to change and some courts may be offering remote assistance. 

The Attorney General is California’s chief law officer and is charged with representing “the people” of our state, not specific individuals or groups; therefore, he cannot represent or provide legal advice to individuals or groups. If you are interested in seeking pro bono legal services, please visit and click the “Search for Legal Help” tab at the top of the page.

If you believe that a bankrupt business is not honoring your bankruptcy rights, you may file a complaint with the Attorney General’s office at

For help finding a private lawyer, you can also call the State Bar at (866) 442-2529 or (415) 538-2250, or visit

This consumer alert is also available in the following languages: KoreanSpanish, Tagalog, and Traditional Chinese.

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