Guidance

What to do when an insolvent company or bankrupt person owes you money

Updated 1 February 2019

1. If an insolvent company or bankrupt person owes you money

If you’re owed money, you’re a creditor of the person or company that is in debt to you.

A person or company is ‘insolvent’ if they can’t pay their debts.

In some cases they might be formally insolvent. For example, this might be where a:

• bankruptcy or debt relief order is made against an individual
• company has gone into compulsory liquidation

In some cases, they’ll be referred to us. If they owe you money, we might be able to help.

You can find out more about your options if you’re owed money by an individual or company that is not formally insolvent.

2. What you need to do

You can find which individuals or companies are in formal insolvency proceedings, and who is dealing with the case, by searching:

• the Individual Insolvency Register if the individual is bankrupt or has a debt relief order
• the Companies House service if it’s a company liquidation or administration

If we know you’re a creditor in a bankruptcy or compulsory liquidation, we’ll send you a report. If there are assets, we might ask you to complete a ‘proof of debt’.

If we have not contacted you, but you know an individual is bankrupt or a company is in compulsory liquidation, contact the official receiver (who works for the Insolvency Service). We’ll add you to the list of creditors and send you a report.

Contact the insolvency practitioner if you have not been contacted and an insolvency practitioner is dealing with the bankruptcy, or the company in:

• administration
• voluntary liquidation
• compulsory liquidation

3. What to expect

We’ll usually send out a report to creditors after we’ve finished our initial enquiries. This can take up to 12 weeks.

This report tells you:

• when the bankruptcy or insolvency order was made
• what assets we know the person or company has
• what liabilities (or debts) the person or company has
• the circumstances that led to the insolvency, if known
• if we think there will be any money that can be paid to creditors

If the person or company in formal insolvency does not have many or any assets, you will not get your money back.

You’ll get some of your money back if there are more than enough assets that can be sold to pay the:

• costs and expenses of the insolvency
• secured creditors

You can find out how assets are distributed to creditors and if you will be paid by reading our guidance for creditors.

It often takes a long time to deal with assets, in some cases, a number of years. So you might not hear back from us, or the appointed insolvency practitioner, for some time after we’ve sent you the report to creditors.

If there are not many assets, or no assets at all, the official receiver will probably not contact you again.

4. Customers of an insolvent company or person

4.1 If you owe money

If a company or person becomes insolvent (also called ‘going bust’) when you owe them money, you still have to pay it. The official receiver or the insolvency practitioner will contact you.

4.2 If you bought something from them

In some cases, you might have paid for something, but the insolvent person or company has not delivered it.

If you paid for the item by credit card, contact your credit card company who might be able to help. If you get all your money back from the credit card company, you stop being a creditor of the insolvent. This means you cannot use our process to claim your money again.

If you paid for the item another way, you’ll need to be added to the list of creditors. Contact the official receiver or insolvency practitioner dealing with the case if you need to do this.