In re City Sports, Inc.

Re: D.L 712

OPINION

KEVIN GROSS, U.S.B.J.

The issue at hand is: should a claim for unredeemed gift cards1 be classified as a priority claim or a general unsecured claim? The Commonwealth of Massachusetts (the “Commonwealth”) filed a claim (“Claim”) for unredeemed gift cards issued by City Sports, Inc., and City Sports-DC, LLC2 (collectively, “Debtors”) and seeks priority status on the claim under Bankruptcy Code § 507(a)(7) (“section 507(a)(7)”).3 Debtors estimate the aggregate value of unredeemed gift cards at the end of its liquidation sales to be $1,182, 668. Debtors maintain that they cannot…