Companies going out of business
When you hear that a company is closing down or has gone out of business, the news can be worrying for everyone involved, including traders, suppliers, creditors, staff and consumers.
Depending on the situation, the company may have gone out of business completely, or it may be in liquidation, examinership, or receivership.
Our information will help you understand the impact on you if a company is going out of business. Each situation is likely to have different circumstances so our information is a guide only and you should bear this in mind. But you should act quickly in all cases.
In general, you may be at greater risk of losing out if you have paid for goods or services that haven't yet been delivered when a trader or company goes out of business.
There are four main ways in which you could lose your money in the event of a company going out of business:
- You have paid in full for a product to be collected/delivered at a later date
- You have paid a deposit on a product
- You bought gift vouchers or gift cards from the company
- You discover you have a faulty product
If the company goes into examinership, liquidation, or receivership, you will be treated as an “unsecured creditor”. A creditor is someone the company owes money to. If you have paid for items that the company has not delivered yet, for example a sofa, and the company goes out of business, then you are a creditor as the company owes you money. However, as an unsecured creditor you rank behind other types of creditors, such as Revenue, staff of the company who are owed wages and banks that are owed money by the company.
In general terms, if a company changes ownership, the new owners may not have purchased the previous owner's liabilities. This means the new owners may not have to honour gift vouchers issued by the previous owner. The new owners may also not be responsible for completing orders placed with the previous owner which have not yet been delivered.
What to do if a company closes down
There are number of things you can do to protect yourself from being affected by a company's closure:
- Think carefully before deciding to pay in advance for goods
- Only offer to pay a small deposit
- Before placing a deposit, check with the seller on how long it will take before the goods can be delivered
- Do not pay in full for items if there is a long delivery period involved. Even if you have only paid a deposit, avoid buying items if there is a long delay in delivery.
- When goods are delivered, check them immediately for possible faults and to make sure they are the items you paid for.
- If possible, pay by credit card as all credit cards provide ‘chargeback’ rights, so you can get your money back if the items are not delivered. Some debit cards also provide chargeback, but not all do. Get more information in our Disputed transactions ‘Chargeback’ section.
- Use gift vouchers or credit notes quickly. If a business goes into liquidation and you have an unused gift voucher or credit note, you will be treated as an “unsecured creditor”.
If you have paid money to a trader who goes out of business before your goods are delivered, what can you do?
- If the retailer goes into liquidation and your goods have not been delivered, contact the liquidator for information on how to take possession of your goods.
- Your contract is with the retailer. So, if a retailer's supplier goes out of business, rather than the retailer itself, the retailer should fix the problem for you.
- Check the company's website and also the website of the liquidator, examiner or receiver to get the latest news on the company's situation. Contact the official appointed to look after the company's affairs for further details.
- If you have been given a guarantee by the manufacturer, you could also make a claim against the manufacturer if the goods turn out to be faulty.
- If you paid for goods by credit card or certain debit cards, ask your card provider to reverse the transaction using a chargeback.
Information on the liquidator/examiner/receiver for the company is available from the Companies Registration Office (CRO)