Consumer Rights When a Company Goes Out of Business or Stops Trading

When a company stops trading or goes out of business, the implication spread much further than the business owners and employees. Customers can suffer significant losses if they have undelivered purchases or orders when a company goes out of business, and so it is important to understand the consumer rights available.

The following guide provides information on the times at which consumers are protected following the closure of a business, how to contact a business that has stopped trading and how you can claim for undelivered products and services that have been paid for.

Can I get money back if I ordered from a business which has since ceased trading?

If you have ordered and paid for an item or service and the company subsequently ceases trading, there are a number of ways in which you may be able to get your money back or have the work completed. Unfortunately, there is no guarantee that a consumer will be refunded in the event of a business closure, but attempts can be made in several ways.

Make Contact with the Company

In the first instance, try to contact the company to either request that the services or product ordered are supplied, or a refund is provided. Sole traders, who are those who run a business for themselves, and partnerships that cease trading will be responsible for the work, goods or services that the customer has paid for.

For other companies, try to call, email or visit their premises to see what will happen about the products that you have paid for. Take evidence of your purchase and ask the company to confirm when you will receive the items or services or when you will be refunded.

What to do if it is not Possible to Contact the Company

If a company has stopped trading, they may be difficult to contact, particularly if they have left the premises. Try to search for the company online using websites such as:

• Companies House - for limited companies
• Insolvency Register site - for sole traders or partnership companies. When searching on this site, search for both the trading name and the person's individual name.

The information available on these sites can take a few weeks to be updated and so don't give up hope. It may be worth revisiting the sites at a later date if nothing appears.

How to Deal with a Business that Has Ceased Trading

When you become aware that a business that you have bought from has ceased trading and you're still owed services or goods, seek out the information of the company's administrator or receiver. This is the person who will deal with settling the company's debts. Their details can usually be found on the business' website. With this information, you will be able to make a claim for what is owed to you.

When you add yourself as a creditor to an administrator's list, you register yourself as someone to whom the company owes money. The administrator is obliged to pay debts to people like banks first and so do be aware that if there are insufficient funds and assets, you might not receive any monies owed through this route. But it is still worth a try if other options have proved unsuccessful.

How to Make a Claim Against a Business that has Stopped Trading

It may be possible to claim back money for goods or services that have not been received once a business stops trading. This can be done by:

• Completing a registration as a creditor. Complete the registration form and submit it to the administrator of the business.
• Make an application for a ‘Section 75 claim' through a credit card provider. If the cost of the products or services were more than £100 and you made payment with a credit card, you will be offered protection by the card provider.

Request a ‘chargeback' from the bank or card that you paid with. This is not a well-known offer, and some bank staff may not be aware that they offer this facility and so request management support if needed.