Companies going into administration is becoming ever more common place. To help you understand where you stand, we explain your rights if a retailer you make a purchase from goes into administration.

New purchases

Once a retailer has officially gone into administration it will usually remain open for a number of weeks in an attempt to clear its remaining stock and raise as much money as possible.

If you have store credit or gift vouchers you should spend these while the store is still trading. If you do not do this you will have to claim their worth back from the administrators and may end up getting little back, if anything.

Make sure you keep the receipts from any purchases that you make as you may be able to make a claim if the product later turns out to be faulty.

Returns and refunds

A company's customer refund policy is unlikely to be upheld once they have gone into administration. This means that you will be unable to claim a refund from the store if an item you have previously purchased is unwanted or faulty.

If the store is still open then you should speak to staff and see whether they are able to issue a replacement. However, if they are unable to do this, or the store is closed for business you will need to place a claim with the administrators.

Again, you may be lucky and receive some remuneration for the item but this is by no means a given and depends entirely on the amount of capital the company closed with.

Unfulfilled orders

If a company you have placed an order with goes into administration before they have delivered, the first thing you should do is contact the retailer to check the status of your order. Most larger companies will keep their customer service helplines open until all of their shops have been closed and so will usually be able to assist providing you have the details of your order to hand.

If your purchase is completed, packaged and ready to be dispatched in the retailer's warehouse they should still be able to fulfill your order. You may need to reconfirm delivery and in some circumstances arrange to collect the item yourself if they are unable to get it to you.

If the company are unable to fulfill your order and you have already laid down either a partial deposit, or the full amount, there are several courses of action available to you. The most appropriate will depend on the value of your unfulfilled order and how you paid.

If you paid by credit card

If the value of your order was between 100 and 30,000 and you paid at least some by credit card (this can be any amount either under or over the 100 product value minimum), your card provider will be obliged to issue a refund.

This is thanks to Section 75 of the Consumer Credit Act, which states that the credit provider is "jointly and severally liable" for your purchase.

If your order was valued at less that 100 or more than 30,000 and you paid on credit card, you will not be able to claim in this way.

If you paid by Visa or Mastercard debit card

If you made your purchase using a Visa or Mastercard debit card you may be able to claim your money back using their Chargeback service.

This is where your debit card provider reclaims the value of your purchase directly from the retailer's bank and charges it back to you.

To make a claim in this way you will need to contact your bank within 120 days or becoming aware of the issue and request that they instigate a 'chargeback' for the value of your purchase.

This can be for any amount but you will need to have any details relating to your order to hand. It is important to bear in mind that this is not a guaranteed process and you may not be able to claim your money back in this way.

If you paid by some other means

If the above does not work or if you paid with cash or by some other means, the procedures explained above will not apply. Instead you will need to contact the administrators and make a claim directly.

To do this you should:

  1. 1.

    Find out who is acting as the retailer's administrator and how you can contact them. This information should be readily available either on the retailer's website or in the press. However, if you are having difficulty finding it you can search The Individual Insolvency Register (for sole traders or partnerships) or Companies House for limited companies.

  2. 2.

    Write to the administrator explaining your situation and detailing how much money you are owed by the company, when your order was placed, how you paid and any reference numbers you have. You should include copies of any relevant paperwork and order confirmations with your letter.

There is no guarantee that you will get all or even any of your money back from the administrators. It depends entirely on how much money the closed company has to be distributed and how many creditors they have with outstanding amounts to be paid.

Citizens Advice has more information about your rights on their website and they are able to offer advice should you need to make a claim from a retailer that has gone out of business.