What Happens to Your Order or Deposit When a Company Goes Bankrupt
Open orders, deposits, subscriptions, warranties and returns after a Chapter 11 or Chapter 7 filing: what the customer programs order allows, the $3,800 deposit priority and the credit card route.
When a company files for Chapter 11, a bankruptcy judge usually lets it keep honoring customer orders, returns, warranties and loyalty programs, because it wants to keep its customers while it reorganizes. In Chapter 7 the business stops and a trustee sells what is left, so undelivered orders become claims. Consumer deposits for goods never delivered get priority up to $3,800 per person. The case’s “customer programs” order says what the company may honor.
Will my order still be delivered if the company files Chapter 11?
Usually, yes. In the first days of a Chapter 11 case the company files a set of “first day” motions, and one of them nearly always asks for permission to continue its customer programs: shipping orders already paid for, accepting returns and exchanges, honoring warranties, gift cards and rewards points, and issuing refunds. Without court approval, a company in bankruptcy generally cannot pay debts that arose before the filing, and a prepaid order is one of those debts.
Eddie Bauer LLC and its affiliates, which ran the Eddie Bauer stores, are an example. They filed for Chapter 11 in New Jersey on February 9, 2026 (Case No. 26-11422). The next day the court entered an interim order authorizing them to “maintain and administer their Customer Programs” and honor related obligations from before the filing, with a final hearing set for March 3, 2026. These orders authorize, but do not require, the company to honor each program.
What happens to customer programs in Chapter 7 or a liquidation?
In Chapter 7 the company stops operating and a trustee takes over to sell the assets and pay creditors. Undelivered orders are usually not filled, warranties issued by the company stop being serviced, and subscriptions end. Your remedy becomes a claim in the case, and a credit card dispute if you paid by card.
Chapter 11 cases can end the same way. When a company decides to close stores, a separate store-closing order typically changes customer policies at those stores. In the Eddie Bauer case, a notice to customers said gift cards and rewards points would be accepted at closing stores only through March 12, 2026, that merchandise sold at those stores was final sale, and that returns would not be accepted. Our guide to going-out-of-business sales in bankruptcy covers those orders.
| What you have | Chapter 11, company keeps operating | Chapter 7, or store closing |
|---|---|---|
| Paid order not yet shipped | Usually shipped under the customer programs order | Usually not filled; file a claim or dispute the charge |
| Deposit on goods or services | Often honored | Priority claim up to $3,800 per person, then general unsecured |
| Gift card or store credit | Usually honored, sometimes with limits | Accepted only until a set deadline, then worthless |
| Return or exchange | Usually honored under the normal policy | Final sale at closing stores |
| Company warranty or service plan | Usually honored | May stop; manufacturer and third-party plans are separate |
| Prepaid subscription or membership | Usually continues | Ends; unused portion becomes a claim |
Do customer deposits get priority in bankruptcy?
Yes, up to a limit. Under 11 U.S.C. 507(a)(7), individuals who paid a deposit before the filing for property or services for personal, family or household use that were never delivered have a priority unsecured claim. The cap is $3,800 per individual for cases filed on or after April 1, 2025, as of November 2026; it is adjusted every three years.
Priority means these claims are paid before general unsecured claims such as most suppliers and landlords, but after secured lenders and administrative costs of the case. Any amount above $3,800 is a general unsecured claim, which often recovers only cents on the dollar. Business purchases do not qualify for this priority. To get paid, you may need to file a proof of claim by the case’s bar date; see how to file a proof of claim.
Can I get my money back through my credit card?
Often, yes, and it is usually faster than a bankruptcy claim. Under the Fair Credit Billing Act, a charge for goods or services that were not delivered as agreed is a billing error you can dispute. According to the FTC’s consumer guide, your written dispute must reach the card issuer within 60 days after the first statement showing the charge was sent; the issuer must acknowledge it within 30 days and resolve it within 90 days.
- Check the date of the first statement that showed the charge.
- Write to the issuer’s billing-inquiries address (many issuers also accept online disputes) with your account number, the charge and why it is wrong.
- Attach copies of the order confirmation and any notice that the company will not deliver.
- Keep paying the rest of your bill; the disputed amount can be withheld while the issuer investigates.
Debit cards and cash do not carry the same Fair Credit Billing Act rights, though some banks offer their own dispute processes. If your deposit is too old for a card dispute, the bankruptcy claim is the remaining route.
How do I find out what the company will honor?
Large Chapter 11 cases have a claims and noticing agent, such as Stretto, Kroll or Epiq, that posts every court filing on a free case website. Search the docket for “customer programs,” “store closing” or “notice to customers.” The customer programs order lists what is covered, and store-closing notices list deadlines for gift cards and returns. Gift cards have their own rules, explained in are gift cards still good in bankruptcy.
Bottom line
If you have an undelivered order from a company that just filed, check the customer programs order on the claims agent’s site first, then the date of your card statement: the 60-day dispute window runs from when that statement was sent, not from the bankruptcy filing. Waiting for the case to sort itself out can let that window close.
FAQ
Is my product warranty still valid if the store goes bankrupt?
A manufacturer’s warranty is usually unaffected, because the manufacturer is a different company. A warranty or service plan issued by the bankrupt retailer depends on the customer programs order, and third-party service contracts are generally handled by the third party.
Can a bankrupt company cancel my subscription?
A company in Chapter 11 can ask the court to reject contracts, and a Chapter 7 trustee stops operations. Either way, the unused prepaid amount becomes a claim against the company.
Do I need to file a proof of claim for a small deposit?
If the company is not refunding or delivering, yes, in most cases, by the bar date in the claims notice. Check whether the debtor’s schedules already list your claim as undisputed, which can make a separate filing unnecessary in Chapter 11.
