Companies going out of business
What to do if a company goes out of business
If a company you have bought from goes out of business, you may be at risk of losing money, especially if you have already paid for goods or services that have not yet been delivered. A company in financial difficulty that may go out of business is put into either liquidation, examinership or receivership. Each situation can affect your rights in different ways.
If you have paid for items that have not been delivered or cannot be used, you are considered a creditor because the business owes you the item or a refund if it cannot deliver. Your rights also depend on how you paid for an item or a service, for example whether you paid in full by debit or credit card or bought through a hire purchase agreement with some payments still due.
It is important to act quickly if a business you bought from is in difficulty, especially if you have already paid for goods or services that have not been delivered.
Examinership, liquidation or receivership
If the business is in examinership, liquidation or receivership, a consumer will usually be treated as an unsecured creditor. This means you are owed money by the company but your debt is a lower priority than debts owed to priority and secured creditors such as Revenue, employees and banks. Your chance of getting your money back may be limited, as it will depend on how much money is left after the higher priority creditors are paid.
Change of ownership
If a company changes ownership, depending on the terms of the sale, the new owners may not be responsible for honouring gift vouchers, fulfilling previous orders or repairing faulty items.
What are the main risks to consumers if a business closes down?
As a consumer, you could lose money in several ways if a company goes out of business, including if:
- You have paid in full for something that is due to be collected or delivered
- You have paid a deposit
- You have a gift voucher or gift card for the business
- You find you have a faulty product bought from the business
What should you do if you bought from a business that closes?
Business closes before item is delivered
If the business goes into liquidation and your item has not been delivered, contact the liquidator to see if you can get the item. Include details of the product, how much you paid for it and whether you want it to be delivered or get a refund.
Check the business’s website and the website of the liquidator, examiner or receiver for updates. You can find out the name and contact details of the liquidator, examiner or receiver for a business from the Companies Registration Office (CRO).
If you paid by card, ask your card provider to reverse the transaction using chargeback.
Business’s supplier closes before the item is delivered
If the supplier of the business you bought from closes down, the business should resolve the issue with you. Your contract is only with the business you bought from.
Business closes and the item is faulty
If you have a faulty item and the manufacturer’s guarantee, you may be able to deal directly with the manufacturer to resolve the issue.
Business closes and you still owe money on the item
If you have paid for an item or service by instalments, for example through hire purchase a “buy now pay later” plan, you will need to make all the payments you owe. This is because the financing for your purchase is organised through a separate company, not from the business where you made the purchase.
What can you do when shopping to protect yourself in case the company goes out of business?
There are steps you can take to reduce your risk if a business closes down:
- Think carefully before paying in advance for goods.
- Only pay a small deposit.
- Before paying a deposit, ask how long delivery will take.
- Avoid paying in full for items with a long delivery period.
- Once items are delivered, check immediately for faults or mistakes.
- If possible, pay by credit or debit card so you can request a chargeback if the item is not delivered.
- Use gift vouchers or credit notes quickly, as you will be treated as an unsecured creditor if the business closes.
If a company is in receivership or examinership , it may be allowed to continue trading, but your consumer rights may be limited. The Corporate Enforcement Authority has more information on receivership and examinership - Corporate Enforcement Authority.
