If a company stops trading or goes out of business
This advice applies to Scotland. See advice for See advice for England, See advice for Northern Ireland, See advice for Wales
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
If you bought an item in the shop before it closed, you don’t have an automatic right to get your money back if there’s nothing wrong with it.
You should check the shop’s policy on returns - if you can’t get in touch with the shop, check with the company that’s dealing with settling the trader’s debts.
If you haven't got the item or service you paid for, you can try to get your money back. This will depend on whether you paid for the item or work:
with a debit card
with a credit card
through a Buy Now Pay Later provider
You should register a claim as a creditor by filling out the form with details of what you’re owed and sending it to the administrator dealing with the trader’s debts.
There's more information on the Accountant in Bankruptcy website.
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, like banks, will get paid first so you might not get any money back.
Applying for a 'Section 75' claim
You can apply for a Section 75 claim if the following applies:
you paid with a credit card
the item or work cost more than £100
You can’t apply for a ‘Section 75 claim’ if you paid with a debit card or through a Buy Now Pay Later provider.
Asking for 'chargeback'
You can ask for chargeback from your bank or card provider if you paid:
with a debit card
with a credit card and you can't use Section 75
with a debit or credit card through a Buy Now Pay Later provider
Many bank staff don’t know about the chargeback scheme, so you might need to talk to a manager.
If you paid with a debit or credit card through a Buy Now Pay Later provider, you can still ask for chargeback - but your bank or credit provider might not agree to do it.
If you paid through a Buy Now Pay Later provider
If you bought something online or in a shop, you should first contact your Buy Now Pay Later provider to check their process and explain the situation.
If your Buy Now Pay Later provider doesn’t resolve the situation, you can ask for chargeback if you’ve paid with a credit or debit card. However, your bank or credit provider might not agree to do it.
You can’t apply for a section 75 claim.
Getting a faulty item repaired or replaced
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
Next Steps
If you’re not satisfied with how they deal with you, you could consider alternative dispute resolution or, as a last resort, going to court.
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.
How to report a phoenix company
Tell the Financial Conduct Authority about it and report it online to Action Fraud or call 0300 123 2040.
Get help
Contact your local Citizens Advice Bureau or Advice Direct Scotland's consumer service.