When a company you have paid goes bust, do not wait for the administrators
Registering as a creditor is right. Waiting to see what happens is what costs people the money.
Ombudsman Referrals Lead
A company you have paid enters administration. The administrators write asking you to register as an unsecured creditor. Most people do that and then wait, because that is what the letter implies you should do.
Registering is correct. Waiting is the expensive part.
Why the creditor queue rarely helps
Unsecured creditors sit near the bottom of the priority order, behind secured lenders, administrators' fees and preferential creditors. Recovery is typically a small fraction of what is owed, distributed long afterwards, and in many administrations there is nothing at all.
Why card claims work better
Chargeback recovers your money through the card scheme from the acquiring bank. Section 75 makes your credit card provider liable in its own right.
Neither depends on the failed company having assets. That is the crucial difference, and it is why these routes work precisely when a creditor claim does not.
The trap
The chargeback window keeps running throughout the administration. It generally starts from the date goods or services were due, not the date of the insolvency.
A company that took your deposit in March, promised delivery in July and collapsed in September has left you with a window that opened in July. Wait four months for the administrators to write, then wait again for a response, and it will have closed.
What to do, in order
- Today: submit a card claim to your bank or card provider. Do not wait for anything.
- Today: check whether any part went on a credit card. If so, Section 75 runs alongside and lasts years.
- This week: register as a creditor with the administrators. It costs nothing and preserves the fallback.
- This week: check whether a protection scheme applies to your purchase.
- Keep: your order confirmation, proof of payment and any correspondence about delivery dates.
These are not alternatives. Pursue all that apply and withdraw the ones you no longer need if a claim succeeds. You cannot recover the same loss twice, and no reputable firm would try.
Gift vouchers and credit notes
Vouchers are generally near-worthless in an insolvency. you become an unsecured creditor for their face value.
One exception is worth knowing. Where a voucher was issued instead of a refund you were entitled to, that is arguable as an unresolved refund rather than a voluntary purchase. It is fact-specific and worth asking about rather than writing off.
If you are told to claim in the administration first
You do not have to exhaust the insolvency before making a card claim, and we have seen people lose their window because they were told otherwise by someone who was simply mistaken.
If a bank tells you this, ask for it in writing. That usually resolves it.
The short version
File the card claim today. Register as a creditor as well. Do not choose between them, and do not wait.
Topics
Marta Nowak
Ombudsman Referrals Lead
CILEx Level 3
Marta prepares the submissions that go to the Financial Ombudsman Service and has a long record of overturning final response letters that looked settled. She reads published decisions for pleasure, which the rest of the team finds mildly concerning.
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