insolvency

(for England, Wales and Northern Ireland)

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If you have sent money in advance for mail order goods and later find the telephone disconnected, or if you have put down a deposit in the shop, or gone back to complain about faulty goods or services, only to find the premises closed and locked, you may be dealing with a company which has ceased trading because it is insolvent; that is, it has no money to carry on business. The Insolvency Act 1986 lays down the legal framework for all such insolvencies. The Insolvency Service, the Official Receiver and licensed Insolvency Practitioners (usually qualified accountants) administer the law.

There are two separate categories of insolvent businesses which you may have to deal with:

• individuals running a business as a sole trader or in partnerships, who become bankrupt or have an IVA - Individual Voluntary Agreement - which is an alternative to bankruptcy.
• companies which have gone into liquidation.

There are steps you can take to try and ensure your money stays safe. For goods or services costing more than £100, pay by credit card as you may be able to claim against the credit card company if the goods or services are not delivered. Never pay in advance for anything if possible, and consider a company which offers an insurance backed guarantee.