Company Gone Bust Guide UK (Your Rights as a Customer 2026)

What Happens When a Company Goes into Administration or Liquidation

When a company becomes insolvent, one of several processes applies. Administration — an insolvency practitioner (administrator) takes over running the company to try to rescue it as a going concern or achieve a better result for creditors than immediate liquidation. A company in administration can still trade but may not fulfil existing orders. Liquidation — the company ceases trading and its assets are sold (liquidated). The proceeds are distributed to creditors in a strict legal order: secured creditors (banks with fixed charges) first, then preferential creditors (employees' wages and pensions), then secured creditors with floating charges, then unsecured creditors (customers, suppliers, and anyone else owed money). As an unsecured customer, you are at the very bottom of the list and will likely receive less than 1p in the pound — often nothing. A Company Voluntary Arrangement (CVA) is a legally binding agreement with creditors to repay debts over time — customers may receive a percentage of what they are owed over several years. If you are owed money, you must prove your debt by submitting a claim to the administrator or liquidator (see below). The key practical point: do not rely on the insolvency process to recover your money — use your payment method rights instead.

Claiming Money Back via Credit Card (Section 75)

Section 75 of the Consumer Credit Act 1974 is your strongest protection when a company goes bust. If you paid for goods or services costing between £100 and £30,000 on a credit card, the card provider is jointly and severally liable with the retailer. This means you can claim the full amount back from your credit card company even if the retailer has ceased trading. Section 75 applies to single items between £100 and £30,000 — if you bought a £2,000 sofa on a credit card and the furniture company goes bust before delivery, your card issuer must refund you. The claim must relate to the cardholder's relationship with the supplier — you can claim for non-delivery, defective goods, or misrepresentation. To make a claim: contact your credit card provider (in writing or via their online portal), explain that the company is insolvent and you have not received the goods or services, provide proof of purchase (statement, receipt, order confirmation) and the company's insolvency status (a notice from the administrator suffices). The card issuer must respond within 8 weeks. If they reject your claim, escalate to the Financial Ombudsman Service. Section 75 refunds are not discretionary — they are a legal right. However, the provider may argue the purchase was made through a third-party payment intermediary (e.g. PayPal) — see below.

Using Chargeback for Debit Card Payments

If you paid by debit card or your credit card purchase was under £100 (below the Section 75 threshold), chargeback is your best option. Chargeback is a voluntary scheme run by Visa, Mastercard, and Amex that allows you to reverse a transaction if the retailer fails to deliver goods or services. Unlike Section 75, chargeback is not a legal right — it is a contractual agreement between card schemes and their member banks. However, in practice it is very effective. Visa chargeback gives you 120 days from the date of the transaction or the expected delivery date to make a claim. Mastercard chargeback gives you 120 days from the transaction date. For a company that has gone bust, you use the "services not provided" or "goods not received" reason code. Contact your bank or card provider and ask to initiate a chargeback. Provide evidence: order confirmation, proof of payment, and confirmation the company is insolvent (administrator's notice or Companies House filing). The bank must process your claim and the merchant's bank has a limited time to contest it. If the merchant's bank does not respond, the chargeback succeeds automatically. The success rate for chargeback against insolvent companies is high because the merchant cannot realistically contest the claim. However, chargeback is time-limited — do not delay. See our Chargeback guide for full details.

Dealing with Administrators and Proving Your Debt

If the company has entered administration or liquidation, the appointed insolvency practitioner (IP) will send a notice to all known creditors. If you are owed money, you must prove your debt by submitting a proof of debt form to the IP within the specified deadline (usually 21–28 days). The form requires: your name and address, the amount owed, details of the transaction (order number, date, description), and whether the debt is secured or unsecured. You can download the standard form from the Insolvency Service website at gov.uk. Submit it by the deadline — late claims may be excluded from any distribution. The IP will review all claims and issue a statement of affairs showing the company's assets and liabilities. If the company goes into liquidation, the liquidator will call a creditors' meeting and send a report on the progress of the liquidation. In almost all cases, unsecured creditors receive little or nothing. The primary value of proving your debt is to vote on the appointment of the IP and to receive any distribution if there are surplus assets. If you have a retention of title clause in your contract (business customers), you may be able to reclaim goods you supplied that have not been sold. For consumers, proving your debt is a fallback — Section 75 or chargeback should be your first resort.

Recovering Goods or Deposits from Insolvent Companies

If you paid a deposit (e.g. for a wedding venue, building work, or a car) and the company goes bust before completing the work, you are an unsecured creditor for the deposit amount. However, there are some specific protections. For building and construction work, if the company is registered under the Consumer Code for Home Builders, deposits are protected by warranty and insurance schemes. For wedding and event venues, check if they belong to a trade body with bonding (e.g. UK Hospitality). If you have already paid for goods that are in the company's possession (e.g. a sofa in the warehouse), the administrator may allow you to collect them if you can prove full payment and the goods are clearly identifiable as yours. In practice, administrators often stop releasing goods to avoid preferential treatment of one creditor over another. If the goods are on hire purchase or conditional sale, the finance company (not the insolvent retailer) owns the goods — your agreement continues and you must keep paying. For goods you have already received that are faulty, your rights are against the original retailer — if the retailer is insolvent, you cannot return the goods for a refund. In that case, claim via Section 75 or chargeback. If you are still within the 30-day right to reject under the Consumer Rights Act 2015, act immediately — the administrator may still process refunds in the early days of administration.

What if You Paid by PayPal, Finance, or Gift Card

If you paid via PayPal, you may be covered by PayPal's Buyer Protection — which covers items not received or significantly not as described. File a dispute in your PayPal account within 180 days of payment. PayPal will contact the seller; if the seller does not respond or the claim is valid, PayPal refunds you. However, if the PayPal payment was funded by a credit card, you may have dual protection — PayPal's Buyer Protection and Section 75. Note that Section 75 claims can be harder when PayPal is used as an intermediary because the card issuer may argue the contract is with PayPal, not the supplier. The Supreme Court has ruled on this (see our Section 75 guide). If you paid via finance (HP, credit agreement, or buy-now-pay-later), the finance provider is jointly liable under the Consumer Credit Act. Contact them immediately — they may refund you or continue the agreement for the undelivered goods. Klarna, Clearpay, and other BNPL have their own dispute resolution — contact their customer service. If you paid with a gift card or voucher, you are an unsecured creditor — gift cards are rarely protected. You can claim the value in the insolvency process but are unlikely to recover anything. Some administrators honour gift cards to maintain customer goodwill during a CVA or administration — contact the administrator directly. For future purchases, avoid using gift cards for high-value items and always use a credit card for purchases over £100 to unlock Section 75 protection.

FAQs

What is the difference between Section 75 and chargeback?

Section 75 is a legal right under the Consumer Credit Act 1974 for credit card purchases between £100 and £30,000. Chargeback is a voluntary scheme for debit and credit cards with no minimum spend but shorter time limits. Section 75 is stronger but has a minimum threshold.

Can I claim if the company is in administration but still trading?

Yes — if the company cannot fulfil your order due to insolvency, you can still claim via Section 75 or chargeback. The administrator may also choose to refund customers to maintain goodwill, but there is no legal obligation to do so.

What if I paid partly by credit card and partly by gift card?

You can claim the credit card portion via Section 75 (if the total item cost is between £100 and £30,000). The gift card portion is unlikely to be recoverable — treat it as an unsecured creditor claim in the insolvency.

Is there a time limit for Section 75 claims?

You have 6 years from the date of the breach (when the company failed to deliver or provide the service) to bring a Section 75 claim. However, act quickly — the card provider may argue you have not mitigated your losses if you delay unreasonably.

What happens to my warranty if the manufacturer goes bust?

Manufacturer warranties become worthless if the manufacturer goes into liquidation. You may have rights against the retailer under the Consumer Rights Act 2015 if the goods are faulty, but if the retailer is also insolvent, your only option is Section 75 or chargeback.