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Problems for the consumer when a trader has stopped trading

This advice applies to Scotland

This page tells you what you can do if the trader you were dealing with has stopped trading. You may have problems with goods or services that you paid for or ordered. You will have to check what type of trader you were dealing with to work out what might have happened and what to do next.

You can check if the trader has already been sequestrated (made bankrupt) or been put into administration or liquidation. The information about types of traders is in Trader has stopped trading or gone bust. The Accountant in Bankruptcy (AiB) office is involved in all insolvencies and may be able to help. You can read about what services it provides on the AiB website at www.aib.gov.uk.

When you are trying to make a complaint to get money already paid returned to you send a copy of any cheque stub, receipt or credit card voucher as proof that you paid it.

Trader was a sole trader

A sole trader is a business fully owned by one person. The trading name may be different from the owner’s name. The business may or may not employ other people. Someone who works for someone else on a self-employed basis, for example, a bricklayer who is sub-contracted to a building firm or someone selling goods or services on a commission only basis, is probably also a sole trader. Legally, the owner is the business and is therefore personally liable for the debts of the business.

When a sole trader in Scotland has stopped trading s/he may have applied to become sequestrated (made bankrupt) or been sequestrated by creditors. You can check this at the Accountant in Bankruptcy’s Register of Insolvencies at http://roi.aib.gov.uk/roi/.

If the trader has not been sequestrated you can also check if any sheriff court decrees for debt have been made against them. You can check this at the Registry Trust Ltd. This might let you know if they are likely to have assets left.

Registry Trust Ltd
153-157 Cleveland Street
London
W1T 6QW

Tel: 020 7380 0133 (Mon-Fri 9.00am-5.00pm)
Fax: 020 7388 0672
Email: info@trustonline.org.uk
Website: www.trustonline.org.uk

If the sole trader is in England or Wales you will need to look at the English information.

Goods are paid for but not delivered

When goods are paid for from a sole trader but not delivered you will have to contact the trader directly. It is possible that your order was dealt with and goods are in storage. This is called having the goods ‘earmarked’ for you. If the trader has been sequestrated (made bankrupt) all the assets of the business will be in the hands of an insolvency practitioner. You may have to contact the insolvency practitioner instead of the trader. You can ask to be added to the list of creditors that will be drawn up by the insolvency practitioner. You can only get the goods you have paid for or the value of the goods returned to you if the insolvency practitioner is distributing any assets to creditors.

Deposit was paid but has not been returned

You may have paid a deposit for the goods or services. If the trader is a sole trader and stopped trading you should check any contracts that were drawn up to check if arrangements were going to be put in place to protect your deposit, for example, from an insurance policy in the sole trader’s name. If it is protected you should be able to get it back but if not protected you can only ask to have your name added to a creditor’s list if there is an insolvency practitioner involved in winding up the business.

Services paid for but work not done

When a sole trader has stopped trading and not finished work that was paid for it may be very difficult to get the work completed. The trader may have been sequestrated (made bankrupt) and an insolvency practitioner may be in control of all the assets of the business. If the trader was a builder and was a member of a trade association it may have a deposit protection scheme that allows you to get the work done by another member.

Goods faulty or services not adequate

When the trader has stopped trading and you are not happy with the goods or services that were provided you can complain to the trader. If the trader has been sequestrated (made bankrupt) it may not be possible to get any money back but you may be able to negotiate to have repairs done or work completed. You may want to contact the insolvency practitioner to ask to be included on the creditors list. If any funds are available you could argue that you need the funds to pay someone else to repair the goods or complete the service.

If the trader was a builder and was a member of a trade association it may have a deposit protection scheme that allows you to get the work done by another member.

Trader was in a partnership

When the trader was in a partnership there are a number of different legal arrangements that might have been created for the partnership. A partnership is two or more people trading together as one firm and sharing the profits. A partnership must have at least two partners but it could have up to 20 partners. The partners are jointly and severally liable for all the business debts. This means that action for the debt can be taken against one partner or all of them. If you would like more information about partnerships there is a helpful factsheet on the Business Debtline website at www.bdl.org.uk.

Who to contact if trading has stopped

When a partnership in Scotland has stopped trading you can still get in touch with the partners of the firm to negotiate return or delivery of any goods or money for services that were not provided. If the partnership has been sequestrated (made bankrupt) and an insolvency practitioner has been appointed you can get in touch with the insolvency practitioner to ask to be included on the list of creditors.

If the partnership is in England and Wales you will need to look at the English information.

Deposit was paid but has not been returned

You may have paid a deposit for the goods or services. If the business was a partnership and has stopped trading you should check any contracts that were drawn up to check if arrangements were going to be put in place to protect your deposit, for example, from an insurance policy in the name of the business. If it is protected you should be able to get it back but if not protected you can only ask to have your name added to a creditor’s list if there is an insolvency practitioner involved in winding up the business. If the partnership was a building firm there are special rules about deposits.

Goods paid for but not delivered

When a partnership has stopped trading you can get in touch with one or all of the partners or an insolvency practitioner if the business has been sequestrated (made bankrupt). You can check the website of the Accountant in Bankruptcy at http://roi.aib.gov.uk/roi/. You may be able to get the goods you have paid for or you may be able to get the value of the goods returned to you if they have been kept aside for you. This is called having the goods 'earmarked' for you.

You should send a copy of any cheque stub, receipt or card voucher as proof that you paid it.

Services paid for but work not done

When a partnership has stopped trading and not finished work that was paid for it may be very difficult to get the work completed. The business may have been sequestrated (made bankrupt) and an insolvency practitioner may be in control of all the assets of the business. If the trader was a builder and a member of a trade association it may have a deposit protection scheme that allows you to get the work done by another member.

Goods faulty or services not adequate

When a partnership has stopped trading and you are not happy with the goods or services that were provided you can complain to the partners. If the business has been sequestrated (made bankrupt) it may not be possible to get any money back but you may be able to negotiate to have repairs done or work completed. You may want to contact the insolvency practitioner if there is one to ask to be included on the creditors list. If any funds are available you could argue that you need the funds to pay someone else to repair the goods or complete the service.

If the partnership was a building firm and was a member of a trade association it may have a deposit protection scheme that allows you to get the work done by another member.

Trader was a limited company

A limited company is a legal form of business which exists independently of the people involved. The name of the business is likely to have Ltd or plc in its title. When the trader was a limited company the shareholders and directors are not usually liable for the debts of the company. If the company has stopped trading because it is insolvent it is likely to be either in 'administration' or 'liquidation'. The task of the administrator or the liquidator is to pay off as many of the debts of the company as possible and in some cases to try and save the business. Individual customers may not be top priority.

Who to contact if trading has stopped

When a limited company has stopped trading because it is in administration or liquidation you will have to contact the administrator or liquidator to make your complaint and ask to be added to a list of creditors. In some cases an administrator may be appointed to try to keep the company in business. You should keep in touch as a creditor in case some funds are made available. You can check what has happened to the company at Companies house at www.companieshouse.gov.uk.

Goods paid for but not delivered

When a limited company has stopped trading you can get in touch with either the administrator or the liquidator. You will only be able to get the goods you have paid for or the value of the goods returned to you if any assets are being distributed.

If the goods had a guarantee or other warranty you may be able to claim your money back against that.

Services paid for but work not done

When a limited company has stopped trading and not finished work that was paid for it may be very difficult to get the work completed. An administrator or liquidator may be in control of all the assets of the business. If the business was a building firm and was a member of a trade association it may have a deposit protection scheme that allows you to get the work done by another member.

Goods faulty or services not adequate

When a limited company has stopped trading and you are not happy with the goods or services that were provided you can complain to the administrator or liquidator. If any funds are available you could argue that you need the funds to pay someone else to repair the goods or complete the service.

If the limited company was a building firm and was a member of a trade association it may have a deposit protection scheme that allows you to get the work done by another member.

Business has been sold

The new owner does not have any responsibility for your complaint.

Business has been made insolvent but starts trading as a second company with the same directors (phoenixing 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 owed by the employer.

How to report it

Tell the Financial Conduct Authority about it and report it online to Action Fraud or call 0300 123 2040.

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