It’s never good news when a business announces it is closing, or they have called in administrators. For many consumers, the first question is: what happens to the goods or services I’ve already paid for? And what about gift cards or credit notes still sitting in my wallet?
The answer depends on the circumstances.
In some cases, a business under administration may continue trading while efforts are made to save it. If you’ve paid in full and have proof of purchase, you may be able to collect your goods or have the service provided. If you’ve only paid a deposit, you might be asked to pay the remaining balance to receive the item.
Gift cards and credit notes can also be affected. An administrator may place conditions on their use, such as requiring you to spend additional money in the same transaction. For example, you may need to make a $100 purchase to redeem a $50 gift card. This is a way for the administrators to bring in extra money to save the business. If the business is sold, the new owners can decide whether they will honour outstanding gift cards or credit notes. That’s why it’s always wise to use gift cards sooner rather than later.
If the business closes up shop because it can’t be saved, you may lose your money even if you’ve paid in full, paid a deposit, bought a gift card or have an item in for repair that was yet to be collected.
Unfortunately, customers are generally last in line to be paid when a business goes bust. After any assets are sold off, secured creditors such as banks and suppliers are paid first, followed by employees. If any money remains, unsecured creditors, such as customers, may receive a share. You can register your details with the administrator or liquidator, but there is a possibility you may only receive part of what you’re owed, or nothing at all.
However, there is another way you could get your money back, but you will need to act quickly. If you paid by credit card, contact your card provider and ask about a chargeback. Strict time limits apply, so don’t delay.
What about warranties or your consumer guarantees? You may still have rights under the Australian Consumer Law. If the manufacturer of your product is different from the retailer that went under, you can contact them directly about a remedy. And if the business continues trading under administration, it may still be able to meet its consumer guarantee obligations. However, if the business has been sold, the new owners can decide whether they will handle claims relating to products purchased before they took over.
To find out who has been appointed to manage a company in administration or liquidation, you can search insolvency notices through Australian Securities and Investments Commission (ASIC). Details may also appear in newspapers or on the company’s website.
If you need advice about your situation, contact Consumer Protection on 1300 30 40 54 or visit consumerprotection.wa.gov.au