Trader has stopped trading or gone bust
What you can do
If your trader has stopped trading, the action you can take will depend on why it has stopped trading and whether the trader was:
- an individual (sole trader)
- a partnership
- a private limited company.
Check with the insolvency practitioner at the AiB if the trader had insurance to cover this situation. If there is insurance cover, a third party can make a claim against the insurer and may not need to go to court to claim compensation. This comes from the Third Parties (Rights against Insurers) Act 2010 which came into force in the summer of 2016.
Trader has stopped trading or gone bust
If you were dealing with a sole trader or a partnership, they are responsible for dealing with your complaint even if they have stopped trading. You should continue to make your complaint to the owner or partner and could consider suing for compensation if your negotiations fail. Sole traders and partners are liable for any debts in the company. If they are in serious debt they may likely be facing sequestration (bankruptcy).
Before you take court action, you will need to find out whether the trader is able to pay. If the trader has gone personally bankrupt, there would be no point in pursuing them through the courts. You can check if someone is bankrupt using the Register of Insolvencies on the Accountant in Bankruptcy website.
You can also check if any of the sole traders or the partners have had sheriff court decrees made against them. You can check this at the Registry Trust Ltd (see below).
If you have already lost money on faulty goods or services, it is not worth losing more money on suing someone who cannot pay. If the trader has not gone out of business it may be worthwhile to try to negotiate with the trader to solve your problem. If you cannot solve the problem by negotiating then you may have to go to court. Read more about trader who is not responding and taking someone to court.
Private limited company
If the supplier is a private limited company it is a corporate organisation owned by shareholders, usually the directors of the company. It is an organisation in its own right and the legal structure of the company limits the shareholders' responsibilities for the debts of the company. It is likely to be a private limited company if its official name has plc or Ltd in it. You can check this on official letter-headed paper of the firm.
If the firm has stopped trading because of debt you may be able to sort out your complaint with the administrator or liquidator.
How to find out if a trader is in administration or liquidation
You may be able to find out whether a trader is in administration or liquidation and details of the administrator or liquidator from one of the following sources:
- Companies House - you can telephone the contact centre on: 0303 1234 500 or visit the Companies House website. Click on 'Go to WebCHeck' under 'Find company information'
- a local traders' association
- a local chamber of commerce
- a trade association (if the trader was a member)
- local accountants or solicitors who deal with administrations
- the local Official Receiver's office - you should find the number in the telephone directory or through directory enquiries
- register of sheriff court decrees at the Registry Trust.
Registry Trust Ltd
153-157 Cleveland Street
Administration and liquidation are the most common legal procedures to be used if a private limited company is in financial trouble. However there are other legal procedures that could be used if the trader has had to stop trading. If the company you were dealing with is not in administration or liquidation, seek advice from the Citizens Advice consumer helpline.
What is administration?
If a limited company goes into administration, an administrator is appointed. An administrator is a company with expertise in business finance and accounts. They will assess if the trading company can be rescued by selling parts of the business or making spending cuts. Alternatively, the whole company may be sold to someone else. This may stop the company from going bust.
What is liquidation?
If a limited company goes into liquidation, a liquidator will be appointed to collect and redistribute all the company's assets (property, money, shares). They will sell the assets and pay the companies the trader owes money to (creditors). This is known as 'winding up'. Once the winding up is complete, the liquidator sends the final accounts to the Registrar of Companies and the company is considered to be dissolved (gone out of business) three months later.
If your trader has gone bust you may be able to resolve your complaint in other ways. For example, if you have a manufacturer's guarantee, or a guarantee backed by an insurance company or you bought the goods or services with a debit or credit card.
If you used a debit or credit card, you may be able to get a refund. If you paid for the service with a credit card, you can contact the card issuer (the bank or credit card company) and say you want to make a 'section 75 claim'. If you used a debit card, say you want to make a 'chargeback' claim. If you don’t get anywhere, you can complain to the Financial Ombudsman Service.