Seller Went Bust Before Delivery
You paid for goods or services from a trader that has since gone into liquidation, administration, or ceased trading before delivering what you ordered. This page explains how to recover your money through credit card protection, chargeback, and insolvency claims.
Quick Answer
If you paid by credit card and the transaction was between £100 and £30,000, your credit card provider is jointly liable under s.75 of the Consumer Credit Act 1974 — claim from them directly. For debit card payments, request a chargeback. If neither applies, register as a creditor with the insolvency practitioner appointed to the business.
Full Explanation
When a trader becomes insolvent before delivering goods or services you have paid for, you are an unsecured creditor of the business. In a liquidation, unsecured creditors typically recover very little — secured creditors, preferential creditors (HMRC, employees), and the costs of the insolvency process all rank ahead of you. Recovering money through the insolvency process alone is usually unsuccessful for consumers.
Section 75 of the Consumer Credit Act 1974 provides consumer credit protection for credit card purchases. Where you use a credit card to pay a trader for goods or services with a cash price between £100 and £30,000, your credit card provider is jointly and severally liable for any misrepresentation or breach of contract by the trader. The trader's insolvency constitutes a breach of contract (failure to deliver). This means you can claim the full cost directly from your credit card provider, regardless of the insolvency. S.75 applies to the whole transaction if any part was paid by credit card — you do not need to have paid the entire amount by card.
For debit card payments, there is no statutory equivalent to s.75. However, Visa and Mastercard both operate voluntary chargeback schemes that allow the card-issuing bank to reverse a transaction where goods or services were not received. You must generally request the chargeback within 120 days of the transaction (Visa) or 120 days from the expected delivery date (Mastercard). Contact your bank's disputes team to initiate the process.
For travel bookings, the ABTA (Association of British Travel Agents) and ATOL (Air Travel Organiser's Licensing) schemes provide additional protection for package holidays and flights respectively. If your holiday or flight was covered by ABTA or ATOL, you can make a claim directly to the scheme regardless of how you paid.
If none of the above applies, you must register as a creditor with the insolvency practitioner (IP) managing the liquidation or administration. You can find who has been appointed by searching Companies House (find-and-update.company-information.service.gov.uk) or the Insolvency Service. Filing a proof of debt is straightforward but recovery is uncertain.
Legal Basis
- §Consumer Credit Act 1974, s.75 — Makes credit card providers jointly and severally liable for breaches of contract and misrepresentations by traders where the cash price was between £100 and £30,000.
- §Visa and Mastercard Chargeback Rules — Voluntary scheme operated by Visa and Mastercard allowing card issuers to reverse transactions where goods or services were not received; applies to debit and credit cards.
- §Insolvency Act 1986, Schedule B1 — Governs administration of insolvent companies; provides the mechanism for creditors to file proofs of debt and participate in distributions.
What To Do
Contact Your Credit Card Provider for a Section 75 Claim
If you paid any part of the cost by credit card and the purchase price was between £100 and £30,000, contact your card provider immediately to raise a s.75 claim. Tell them the trader has gone insolvent and the goods/services have not been delivered. They are legally required to refund you — this is not a discretionary claim.
Request a Chargeback If You Paid by Debit Card
Contact your bank's disputes team and request a chargeback. Explain that the trader has ceased trading and the goods/services were not delivered. Have your order confirmation, payment receipt, and any evidence of the trader's insolvency ready. Act promptly — the 120-day window from payment or expected delivery date is strict.
Register as a Creditor With the Insolvency Practitioner
Search Companies House or the Insolvency Service Register to find the appointed IP. Contact them and file a proof of debt — a form specifying the amount you are owed and providing evidence (order confirmation, payment receipt). You will receive any distribution from the company's assets, but as an unsecured consumer creditor, this is likely to be minimal.
Check for ABTA, ATOL, or Other Scheme Protection
For travel purchases, check whether the trader was ABTA-bonded or ATOL-licensed. Both schemes protect consumers in the event of trader insolvency and provide refunds or alternative arrangements. Look for the ABTA or ATOL logo on your booking confirmation or check the ABTA and CAA websites.
Important Deadlines
Important Warnings
Do not wait before making a s.75 or chargeback claim — deadlines are strict and the bank may refuse a late claim.
A s.75 claim covers the full cost of the goods or services, not just the amount paid by credit card, provided any part was paid by credit card and the cash price was between £100 and £30,000.
If the company is in administration rather than liquidation, there may be a possibility of completing orders — contact the administrators to find out whether they are continuing trading.