Settlement Reached In Dewar Foundation Case

Attorney General Spitzer today praised a court order that authorized a giant agricultural retailer in bankruptcy to redeem hundreds of thousands of dollars worth of gift certificates purchased on or after November 1, 2001.

Spitzer, joined by the Attorneys General from Ohio, Michigan, Pennsylvania, and West Virginia, successfully intervened on behalf of thousands of consumers in the Chapter 11 bankruptcy pending before Justice James D. Gregg of the United States Bankruptcy Court for the Western District of Michigan, Southern Division. The consumers purchased gift certificates from Quality Stores, Inc. without knowing that the agriculture retailer was in bankruptcy reorganization.

"This court ruling is a big ‘win’ for consumers throughout the nation," Spitzer said. "The case draws attention to the need for increased vigilance in protecting consumers’ rights when companies have filed for bankruptcy."

Quality Stores, Inc., a giant Michigan-based retailer that once claimed to be the nation’s largest agricultural specialty merchant, consented to bankruptcy reorganization protection on November 1, 2001. Since that time, including the busy holiday shopping season, the majority of the company’s stores remained in business, and sold thousands of gift certificates valued in excess of $800,000.

A December 31st court order, authorizing the sale of Quality Stores, Inc.’s assets to liquidators, had authorized the debtor and the liquidators to refuse to honor these gift certificates.

Since the commencement of the going-out-of-business sales at the beginning of this year, Spitzer’s office has been contacted by more than 100 consumers throughout upstate New York concerned about stores’ failure to honor gift certificates.

Yesterday’s court order by Judge Gregg modifies provisions of the December order and sale agreement to allow for the redemption of gift certificates by two separate means - consumers can mail the gift certificates directly to Quality Stores, Inc. for a refund, or can redeem the certificates for merchandise at the stores that are still open. Gift certificates already sent by consumers to the bankruptcy court as attachments to proofs of claim will be forwarded to Quality Stores for repayment.

The Joint Venture that purchased the assets of Quality Stores for liquidation includes: Tractor Supply Company of Nashville, Tennessee; Great American Group of Deerfield, Illinois; Gordon Brothers Retail Partners, LLC of Boston, Massachusetts; and DJM Asset Management LLC of Melville, New York.

Until its bankruptcy, Quality Stores, Inc. operated nearly 300 stores in as many as 30 states under the following names: CT Farm & Country; Country General; Quality Farm & Fleet; County Post; Central Farm and Fleet, and FISCO. Its stores sell such items as outdoor clothing and farm equipment, fencing posts, power tools, wood stoves, and pet and livestock food and supplies.

Today, 152 stores remain in 19 states. In New York State, the locations of stores that continue to operate include: Wellsville, Dunkirk, Arcade, Salamanca, Batavia, Jamestown, Canandaigua, Vestal, Painted Post, Oneonta, Cortland, Auburn, Watertown, Hornell, Utica, Amsterdam, Lockport, Olean, Horseheads, Geneseo, Fulton, Lyons, and Cobleskill.

Individuals with questions related to Quality Store’s gift certificates are encouraged to contact the Attorney General’s consumer help line at (800) 771-7755. Consumers who would like to receive the cash value of their gift certificates must send the certificates to: Quality Stores, Inc., 455 E. Ellis Rd., P.O. Box 3315, Muskegon, MI., 49443-3315. Attention: Gift Certificate Redemption Center.

This case was handled by Assistant Attorneys General Leslie Neustadt of the Consumer Frauds and Protection Bureau and Nancy Hershey Lord of the Civil Recoveries Bureau with the assistance of Assistant Attorneys General Michael Danaher of the Binghamton Regional Office and Carlos Rodriguez of the Rochester Regional Office.