What can I do if the company stops trading?
If the company you are claiming against stops trading, you can take the follow steps to try and resolve the problem or recover your money.
If a guarantee or warranty was supplied for the goods or services purchased, then you may be able to use this to make a claim. It’s important to note that guarantees and warranties have their own set of terms and conditions which will determine what your entitled to, so its best to check these before making a claim. There is no legal requirement for a warranty or guarantee to be provided.
Depending on how you’ve paid the trader you may be able to obtain a refund. If you paid on a credit card and the payment was over £100 then you automatically have the right to make a claim to your card provider for a refund. You may also have this option if the payment was less than £100 or you paid by debit card, but this will depend on your card provider and there will usually be a time limited on making a claim. For more information check our page on payment methods.
Limited Company or Sole trader
Check whether the company is a limited company (ends in Ltd or Plc) or whether they are a sole trader or partnership. This may determine how you pursue them.
If the company has gone into administration or liquidation, then you will be able to make a claim against the practitioner that’s been appointed to handle this. There could be a long list of creditors with employees, suppliers and HMRC being at the top. There may also be limited company funds which means there’s no guarantee that you’ll receive a refund.
To check whether a company has gone into administration or liquidation you can use the following websites;
For limited companies check:
For sole traders and partnerships:
If a sole trader or partnership stops trading, they are still liable for any company debts, which means that you can pursue the individuals through the courts. There’s no point in taking them to court if they are unable to pay so you’ll want to check the insolvency services website first to see whether they have gone bankrupt.
Limited companies are run by directors and shareholders who have limited liability for the company’s debts, this means that you’ll be unable to take the individual directors to court if the company’s no longer trading.