Understanding What Happens When a Company Stops Trading
When a company stops trading or goes out of business in the UK, it means the business has ceased its operations and is no longer selling goods or services. This can happen in several ways: the company might have gone into administration, liquidation, or simply closed down voluntarily. In all cases, the business is no longer fulfilling orders, providing customer service, or honouring guarantees and warranties.
Common reasons companies stop trading include financial difficulties, insolvency, changes in market demand, or the decision of the owners to retire or move on. Insolvency is one of the most frequent causes, where a company cannot pay its debts as they fall due. When this happens, an administrator or liquidator may be appointed to handle the company’s assets and debts.
If you’ve recently bought goods or services from a company that has stopped trading, you may be worried about what happens next. The main impacts for consumers are:
Undelivered goods or services: Orders may not be fulfilled, and deposits or payments might be lost.
Faulty or misdescribed goods: If you receive items that are not as described or are faulty, it may be harder to get repairs, replacements, or refunds.
Unhonoured guarantees or warranties: Manufacturer or retailer guarantees may no longer be valid if the business has closed.
Despite these challenges, you still have certain consumer rights. Under the Consumer Rights Act 2015, you are entitled to goods that are as described, fit for purpose, and of satisfactory quality. If you experience issues, your rights are explained in more detail in our section on problems with purchased goods. However, if the company is no longer trading, enforcing these rights can be more complicated.
In some situations, you may be able to claim a refund or compensation through your bank or credit card provider, especially if you paid by credit card and the purchase was between £100 and £30,000. This is known as Section 75 protection under the Consumer Credit Act 1974. If you paid by debit card, you might be able to use the chargeback scheme to recover your money.
It’s important to act quickly and gather all relevant documentation, such as receipts, order confirmations, and any communication with the company. While the closure of a business can make it harder to resolve issues, understanding your rights and exploring alternative routes for redress can help you recover your money or seek compensation where possible.
What to Do If You Bought Faulty Goods from a Company That Has Closed
If you’ve bought a product from a company that has since closed down and discovered it’s faulty, it can be worrying to know what to do next. While your options may be more limited than if the business was still operating, you still have certain rights and possible routes to claim a refund, repair, or replacement.
Your Rights When a Company Has Closed
Normally, under the Consumer Rights Act 2015, you’re entitled to a repair, replacement, or refund if goods are faulty or not as described. However, if the company is no longer trading, you can’t return the item or request a fix directly from them. This is often the case if the business has gone into liquidation, administration, or has simply ceased trading.
Can You Still Claim Under a Warranty or Guarantee?
If your product came with a manufacturer’s warranty or guarantee, you might still be able to make a claim, even if the retailer is no longer in business. Warranties and guarantees are sometimes provided directly by the manufacturer rather than the shop you bought from. Check your paperwork or the manufacturer’s website to see what’s covered and how to claim using a warranty or guarantee.
Steps to Take for a Refund or Repair
Check Payment Method Protections:
If you paid by credit card and the item cost between £100 and £30,000, you may be able to claim a refund from your card provider under Section 75 of the Consumer Credit Act 1974. Debit card payments might be covered by the chargeback scheme. Contact your bank or card provider to see if you’re eligible.Contact the Manufacturer:
If there’s a manufacturer’s warranty, reach out to them directly for repair or replacement options.Check for Third-Party Guarantees:
Some products come with insurance or third-party guarantees. Review any documents you received at purchase.Consider Other Legal Routes:
If you’re unable to resolve the issue through these methods, you may have the option to make a claim against the company’s insolvency practitioners, but success is unlikely unless you’re a major creditor.
For more detailed information about your rights and practical steps, see our guide on returns and refunds for faulty goods.
What If the Company Won’t Respond or Refund You?
If you’ve tried the steps above and are still unable to get a refund or repair, you may be wondering what to do if a company won’t refund you in the UK. This guide covers further actions you can take, including making a claim through your payment provider or exploring other legal options.
While it can be more challenging to get your money back when a company has closed, there are still routes you can try. Acting quickly and keeping all your paperwork, receipts, and correspondence will help strengthen your case.
If Your Goods Haven’t Arrived and the Company Has Closed
When a company goes out of business before your goods have arrived, it can be worrying and frustrating. However, you still have certain rights and potential ways to recover your money.
Your Rights If Goods Aren’t Delivered
Under UK law, when you buy goods online or in-store, the seller has a legal duty to deliver what you ordered. If your order hasn’t arrived and the company has stopped trading, you are considered a creditor – someone the company owes money or goods to. Unfortunately, when a business closes, especially if it goes into administration or liquidation, it can be difficult to get your goods or a refund directly from the company.
Checking Delivery Status and Gathering Proof
Before taking further steps, it’s important to confirm whether your order is genuinely undelivered. Check any tracking information, emails, or account updates you may have received. If possible, contact the company, but be aware that responses may be limited or unavailable if they have ceased trading.
Keep all documentation related to your purchase. This includes receipts, order confirmations, payment records, and any correspondence with the company. Proof of purchase is essential if you need to make a claim through your bank or card provider.
Options for Getting Your Money Back
If it’s clear the company is no longer operating and your goods haven’t arrived, you may still have options:
Credit card payments: If you paid by credit card and your purchase was over £100 (but less than £30,000), you may be protected under Section 75 of the Consumer Credit Act 1974. This means you can claim a refund directly from your credit card provider, as they are jointly liable with the seller for breaches of contract.
Debit card payments: If you used a debit card, you might be able to use the chargeback scheme. This isn’t a legal right, but most banks offer it as a way to try to recover your money.
PayPal or other payment services: Check if your payment provider offers buyer protection.
If your claim through your payment provider is unsuccessful, you can register as a creditor with the company’s administrators or liquidators. However, be aware that individual customers are often low on the list of creditors, so full repayment is not guaranteed.
For more details on your rights and the steps you can take, see if something you ordered hasn’t arrived.
Considering Further Action
If you’re unable to recover your money through your bank or payment provider, you might consider other legal routes, such as making a claim in the small claims court. However, this may not be effective if the company has no assets left.
For additional guidance on your next steps, especially if the company is refusing or unable to issue a refund, read our advice on what to do if a company won’t refund you in the UK.
In summary, while it can be challenging to get your goods or money back when a company goes out of business, acting quickly and using the available protections can improve your chances of a successful outcome. Keep all your records and explore every option available to you.
How to Get Your Money Back When a Company Has Gone Out of Business
When a company goes out of business, it can be worrying – especially if you’ve paid for goods or services you haven’t received, or if your purchase turns out to be faulty. Fortunately, there are several ways you may be able to get your money back, depending on how you paid and the circumstances of your purchase.
Using Payment Protections: Credit Card Chargebacks and PayPal Claims
If you paid by credit card, debit card, or PayPal, you may be able to use payment protections to recover your money. For credit and debit cards, a process known as "chargeback" allows you to ask your card provider to reverse the transaction if something goes wrong – such as the company failing to deliver your order. Chargebacks aren’t guaranteed, but they’re often successful if you act quickly and provide evidence.
PayPal also offers its own buyer protection scheme. If you paid through PayPal and the item doesn’t arrive or is significantly not as described, you can raise a dispute through your PayPal account. Make sure to do this within PayPal’s specified time limits.
For a step-by-step guide on what to do next, including how to start a claim, see our page on getting your money back if you paid by card or PayPal.
The Consumer Credit Act: Extra Protection for Credit Card Payments
If you paid for something costing between £100 and £30,000 using a credit card (even if you only paid a deposit on card), Section 75 of the Consumer Credit Act 1974 gives you extra protection. This law makes your credit card provider jointly responsible with the seller if something goes wrong – for example, if the company goes out of business before delivering your goods. You can make a claim directly to your card provider for a refund.
This protection also applies to many car finance agreements, so if you’re affected by a dealership or finance company going bust, you may be able to claim car finance compensation through your credit card provider under Section 75.
When and How to Contact Your Bank or Payment Provider
If the company you bought from has stopped trading, contact your bank, card provider, or PayPal as soon as possible. Explain the situation, provide details of the transaction, and ask to start a chargeback or Section 75 claim. Keep copies of all receipts, emails, and any communication with the company, as you may need to provide evidence.
Time limits apply: for chargebacks, you typically need to act within 120 days of the transaction or expected delivery date. Section 75 claims can be made up to six years after the purchase, but it’s best to act quickly.
Other Legal Routes: Small Claims Court
If you can’t get your money back through your payment provider, you may be able to make a claim through the small claims court. This is usually a last resort, as it can take time and you may have to pay court fees. However, if the company is in administration or liquidation, you’ll be classed as an “unsecured creditor” and may only get some of your money back, if any, depending on the company’s remaining assets.
What to Do If You Paid by Card or PayPal
The best route for most people is to use the protections offered by your card provider or PayPal. These processes are designed to help consumers when companies go out of business. For more practical advice and detailed steps, visit our guide on getting your money back if you paid by card or PayPal.
Remember, acting quickly gives you the best chance of recovering your money. If you’re unsure which route to take, check the details of your payment method and follow the steps outlined above.
Cancelling Orders and Cooling-Off Rights When a Company Stops Trading
When you buy goods online, over the phone, or by mail order, you usually have a legal right to cancel your order within a 14-day “cooling-off” period under the Consumer Contracts Regulations 2013. This right gives you peace of mind to change your mind and get a full refund, even if the goods are not faulty. But what happens if the company you’ve bought from stops trading or goes out of business before your order arrives, or just after you’ve placed it?
Your Right to Cancel Within 14 Days
The 14-day cooling-off period starts the day after you receive your goods (or, for services, the day after you agree to the contract). If you want to cancel your order during this period, you must inform the company – ideally in writing. For more on the process and what to include, see how to cancel a purchase within 14-day cooling-off period.
Cancelling When the Company Has Closed
If the company stops trading or goes out of business shortly after you’ve placed your order, you should still try to exercise your cooling-off rights. Send your cancellation request as soon as possible, keeping a copy for your records. If you have not yet received your goods or services, make it clear in your message that you are cancelling under the 14-day cooling-off period.
What If the Company Doesn’t Respond?
It’s common for companies that have ceased trading to stop responding to emails or calls. If you don’t get a reply, your cancellation is still valid as long as you sent it within the cooling-off period and can prove you did so. Keep copies of any emails or letters you send, as you may need them if you have to make a claim with your bank or credit card provider later.
Using a Cancellation Letter for Breached Contracts
If the company has not delivered your goods, or has failed to provide the service you paid for, this is a breach of contract. In these situations, you can use a letter to cancel a contract that’s been breached to formally end the agreement and request a refund. This template can help you set out your position clearly and may be useful evidence if you need to escalate your claim.
Practical Steps to Protect Yourself
Act quickly: Send your cancellation as soon as you know the company has stopped trading.
Keep evidence: Save all correspondence and proof of payment.
Consider your payment method: If you paid by credit card or certain debit cards, you may be able to claim your money back from your card provider if the company does not refund you.
Understanding your rights around cancelling orders and the cooling-off period can help you act quickly if a company goes out of business. For more detailed guidance, explore the linked resources above.
Dealing with Special Situations: Mispriced Items, Stolen or Counterfeit Goods
When a company goes out of business, dealing with unusual situations – like mispriced items, stolen goods, or counterfeit products – can be especially challenging. Here’s what you need to know about your rights and what steps to take in each scenario.
Mispriced Items
If you bought an item that was incorrectly priced from a company that has now closed, your options may be limited. Normally, your rights around mispriced goods depend on whether a contract was formed at the time of purchase and whether you paid the advertised price or were later asked for more. However, when the company is no longer trading, it may be difficult to get a refund or have the price honoured.
For a detailed explanation of your rights and practical steps you can take, see if you bought a mis-priced item. This guide covers what the law says about pricing errors and what you can do if you’re affected.
Stolen Goods
If you suspect that an item you bought from a now-closed company may be stolen, it’s important to act quickly. In the UK, it is illegal to knowingly buy stolen goods, and you may be required to return the item to its rightful owner. Unfortunately, if the business is no longer operating, getting your money back can be difficult, as there may be no one to contact for a refund.
You can find out what to do next, including how to report your concerns and protect yourself, by reading if you think you’ve bought stolen goods.
Counterfeit or Fake Products
Buying counterfeit or fake products can put your safety at risk and may leave you out of pocket, especially if the company has ceased trading. Counterfeit goods often do not meet UK safety standards and may be dangerous to use. If you discover that a product you bought is fake, you should stop using it immediately.
Even if the business is closed, you can still take action. Find out how to report fake or counterfeit goods to the appropriate authorities, which helps prevent others from being affected.
Why These Issues Matter When a Company Has Closed
When a company is trading, you usually have clear routes to resolve these issues – such as returning goods, claiming a refund, or making a complaint. If the company has stopped trading, these options may no longer be available, making it harder to recover your money or get compensation. This is why it’s important to act quickly if you suspect a problem and to seek help from relevant authorities where possible.
If you paid by credit card or certain debit cards, you might still be able to claim a refund through your card provider under Section 75 of the Consumer Credit Act 1974 or a chargeback scheme. However, these protections do not always cover mispriced, stolen, or counterfeit goods, so it’s important to check the details of your situation.
For more information on your general rights and next steps in these situations, explore the linked guides above. Taking prompt action can help protect your rights and may improve your chances of recovering your money.
Claiming Compensation for Damage Caused by Faulty Products from Closed Companies
If a company has stopped trading or gone out of business and you’ve suffered damage or injury because of a faulty product you bought from them, you still have rights under UK law. Here’s what you need to know and the steps you can take to seek compensation.
Your Rights if a Faulty Product Causes Damage or Injury
Under the Consumer Protection Act 1987, manufacturers, importers, and sometimes retailers can be held responsible if a defective product causes personal injury, property damage, or even death. This law applies even if the company you bought the item from is no longer trading. You may be able to claim compensation from the manufacturer or another business in the supply chain.
How to Claim Compensation When the Company Has Closed
If the retailer has gone out of business, you can:
Contact the Manufacturer or Importer: The company that made or imported the product may still be liable for damage or injury caused by its defect.
Check for Product Liability Insurance: Some companies have insurance that covers claims even after they cease trading. The insurer might handle your claim.
Consider Other Parties: If another business was involved (such as a distributor or wholesaler), they may also be responsible.
For a detailed step-by-step guide on what to do next, including who to contact and how to present your case, see how to claim compensation if an item or product causes damage.
Gathering Evidence and Making a Claim
To support your claim, you’ll need to gather as much evidence as possible. This could include:
Proof of purchase (receipts, order confirmations, bank statements)
Photographs of the faulty product and the damage caused
Medical reports if you were injured
Written statements from witnesses
Any correspondence with the company or manufacturer
Keep all records safe and organised, as these will be crucial for your claim.
When to Seek Legal Advice or Use Alternative Dispute Resolution
If your claim is complex, involves significant injury or damage, or if you’re unsure who is responsible, it’s wise to seek independent legal advice. A solicitor can help you understand your options and may be able to negotiate on your behalf.
Alternatively, you might consider alternative dispute resolution (ADR) methods, such as mediation or arbitration. These can sometimes resolve disputes without going to court, saving you time and money.
If you’re unsure about your next steps or need more information about making a claim, visit the page on how to claim compensation if an item or product causes damage for further guidance.
Additional Resources and Getting More Help
If you’re facing difficulties because a company you bought goods or services from has stopped trading or gone out of business, there are several places you can turn for further support and guidance.
Where to Find Further Advice
When your attempts to resolve an issue directly with the company have failed – perhaps because they are no longer responding or have formally entered administration or liquidation – it’s important to seek expert advice. Independent consumer organisations and legal advisers can help you understand your rights and the best steps to take next. For tailored advice and practical support, see if you need more help about a consumer issue, which provides contact details for trusted consumer advice services and explains how to escalate your complaint.
Help from Consumer Protection Organisations and Legal Advisers
Consumer protection organisations can guide you on your rights under laws such as the Consumer Rights Act 2015 and the Consumer Credit Act 1974. These laws may entitle you to a refund, repair, or replacement for faulty or undelivered goods – even if the business has ceased trading. Legal advisers can also explain your options for making a claim, such as joining the list of creditors in an insolvency process or using ‘Section 75’ protection if you paid by credit card.
If you need specialist support, consumer advisers can help you gather the necessary documents and draft letters to administrators, insurers, or your bank. They can also advise you on whether you have grounds for compensation in more complex cases, such as if you believe you have been misled or mis-sold a financial product. For example, you might want to explore your rights in cases of a mis-sold mortgage in the UK: your guide to rights & remedies.
Related Topics You Might Find Useful
Issues with a company going out of business can sometimes be linked to wider financial or insurance concerns. If you’re experiencing difficulties paying bills as a result, you may find our guidance on problems with paying your water bill helpful. This resource explains your rights if you’re struggling to keep up with regular payments and what support may be available.
Similarly, if your purchase involved any form of insurance – such as extended warranties or travel cover – you may have questions about whether your policy is still valid or how to make a claim. Our section on problems with insurance policies provides practical advice on dealing with insurers and understanding your entitlements if your provider is affected by business closure.
Managing Financial Difficulties
Dealing with the fallout from a company going out of business can sometimes put a strain on your finances, especially if you’re waiting for a refund or compensation. If you’re facing hardship, don’t hesitate to seek help early. Consumer advice services can point you towards debt advice charities, budgeting support, and information on government schemes that may be able to help you manage your payments and avoid further financial stress.
Remember, you’re not alone – there are clear legal protections and support services in place to help you recover your money and manage any knock-on effects. For further guidance or if you’re unsure about your next steps, visit if you need more help about a consumer issue.
