If a company stops trading or goes out of business
You might end up without the item you paid for or with unfinished work if a company or trader stops trading or goes out of business. There are several ways to try to get your money back or get the work done. However, there’s no guarantee you’ll get what you paid for.
If you’ve purchased through a sole trader
A sole trader (someone who runs their own business) or partnership that stops trading is responsible for work or items that have been paid for.
Call the company, visit their office or shop, or write to them to find out what’s happening. Explain what you’ve paid for and ask for the item you bought or a refund.
Check any contracts or paperwork
If you paid a deposit for the goods or services, you should check any contracts you have to see if it’s protected by, for example, an insurance policy in the name of the business or sole trader. If the deposit is protected, you should be able to get it back.
You can also check the trader’s website or paperwork you have for:
- details about any trade association or professional body they belong to
- any code of practice they should follow or dispute resolution scheme they belong to.
Most traders providing a service must give you this information before they finish work for you. If there’s no written contract, they should have given you the information before starting the work. If you weren’t given the information you can report them to Trading Standards for breaching the Provision of Services Regulations 2009. This doesn’t apply if you simply bought goods from a trader.
If you can’t reach the company
If you can’t get hold of a company or want to confirm that they’ve gone out of business (also called going bankrupt or going into administration or liquidation), search for their name on:
- the Companies House website if they’re a limited company (with the letters ‘Ltd’ or ‘Plc’ after their name)
- the Register of Insolvencies on the Accountant in Bankruptcy website if they’re an individual (a sole trader) or a partnership - search both the name of the person and their trading name.
It can take a few weeks for information to appear on these websites.
If you booked a holiday
You can look for details of travel companies that have gone out of business on ABTA’s website.
If your holiday booking is protected by ATOL, you should also check the list of ATOL protected travel companies that have gone out of business on the CAA website.
If the company has gone out of business
Get details of the administrator or liquidator - the person who is dealing with settling the trader’s debts. The names of those administrators will usually be on the website of the company that’s gone bust. You’ll need this information if you need to make a claim.
Dealing with a company that's gone out of business
When you know for certain that a company has gone out of business and you haven’t got what you paid for, you can try to get money back by:
- registering a claim as a creditor - fill out the form with details of what you are owed and send it to the administrator dealing with the trader’s debts
- claiming against the company’s insurance. You can check with the administrator dealing with the trader’s debts if there’s insurance cover.
- applying for a ‘Section 75 claim’ from your credit card provider if the item or work cost more than £100 and you paid with a credit card
- asking for ‘chargeback’ from your bank or card provider if you paid with a debit card - many bank staff don’t know about the scheme, so you may need to talk to a manager
If you’ve registered a claim
When you register a claim as a creditor, you’re added to a list of all the people the company owes money to. Other people, for example banks, will get paid first, so you might not get anything.
If you’ve already got the item but it’s faulty, you can try to:
- use the guarantee or warranty which came with the item to get repairs or a replacement
- ask the administrator to get repairs or a replacement - there’s a small chance they’ll be able to help
If you’re dealing with a company that stops trading
When a limited company stops trading, you can’t go to court. If it’s been bought by another company, try explaining what’s happened to the new owners.
Sole traders and partners are liable for any company debts, even if they’ve stopped trading. Before you take court action, check if the trader can pay. If they’ve gone bankrupt, there would be no point in taking them to court.
If an insolvent business starts trading as a second company with the same directors
Sometimes when a company goes bankrupt a second company is immediately started up with the same directors. This company is sometimes known as a 'phoenix' company. It may be set up to appear to be a different business from the first company, but, in reality, continues to operate and trade in exactly the same way.
Creditors are left out of pocket for the goods or services they supplied. In some cases employees are unable to get money back that’s owed by the employer.