Your Rights When a Company Goes Into Administration

A company you have paid money to has gone into administration. Maybe you are waiting for a delivery that will never come. Maybe you have a gift card with a balance on it. Maybe you paid a deposit for work that has not been done. Whatever the situation, the first thing to know is that you are an unsecured creditor, which means you are at the back of a very long queue.

What Administration Means

When a company goes into administration, an insolvency practitioner takes control. Their job is to try to rescue the business or, failing that, to get the best return for creditors. Secured creditors (banks, mainly) get paid first. Then employees. Then HMRC. Customers with outstanding orders or refunds are unsecured creditors and typically receive pennies in the pound, if anything.

If You Paid by Credit Card

This is where Section 75 of the Consumer Credit Act saves you. If the purchase was between £100 and £30,000 and you paid by credit card, even partly, your credit card company is jointly liable. The company going bust does not affect this. Contact your credit card company and make a Section 75 claim. They have to refund you.

If You Paid by Debit Card

You can try chargeback through your bank. It is not guaranteed, but banks often process these claims favourably when the company has clearly failed. You usually need to claim within 120 days, though some banks extend this for insolvency situations.

Gift Cards and Store Credit

Bad news, unfortunately. Gift cards are treated as unsecured debt. You can register your claim with the administrator, but realistically you are unlikely to get much back. This is why consumer advice has always been to spend gift cards promptly rather than hoarding them.

Deposits for Work Not Done

If you paid a builder, kitchen fitter, or other tradesperson a deposit and they have gone under before doing the work, your options depend on how you paid. Credit card, use Section 75. Debit card, try chargeback. Bank transfer or cash, you are an unsecured creditor. Some trade bodies offer guarantee schemes that cover deposits if a member goes bust, so check whether the company was part of one.

What to Do Right Now

Register as a creditor with the administrator. Their details will usually be on the company's website or on Companies House. This costs nothing and ensures you are notified of any distributions. Then pursue your card company for a refund through Section 75 or chargeback. Do not wait for the administration process to play out before doing this, it can take years and you are unlikely to see much at the end of it.

Always check the terms of your specific agreement, as individual contracts can vary. This article is for general guidance only and is not legal advice.