The news about Arcadia which includes Top Shop, Burton and Dorothy Perkins going bust has shone a spotlight on your rights when a company goes into administration.

It was probably inevitable that this would happen with the impact of the Covid-19 pandemic and prolonged lockdowns with no end in sight. Nevertheless, it is a sad day for the High Street and 13,000 employees at the worst possible time before Christmas.

Your rights when a company goes into administration

What happens if a company goes into administration?

When a company goes into administration, an administrator is appointed to take over the control of the business. It buys the business time to find a buyer, sell off parts of the business or ultimately close it down if a solution cannot be found.

The administrator’s purpose is to use the company’s assets to repay those who are owed money (creditors).

I have placed an order that has not yet been delivered. How can I get my money back?

The company will still be trading so you can cancel the order. The Consumer Contracts Regulations 2013 gives you a 14-day cooling off period to change your mind when you have ordered goods online.

I cannot contact the firm to cancel my order. How do I get a refund?

If you have paid by credit card, you are protected by Section 75 of the Consumer Credit Act 1974 which holds a firm jointly liable if the goods cost more than £100.

The credit card provider is jointly liable even if you have only paid 1p deposit on an order. Raise a chargeback with your credit card provider and they will investigate your claim. You will be given a refund if your claim is proved legitimate.

I paid by debit card. How can I get a refund?

Simply contact your bank and ask them to raise a chargeback to refund you instead.

Is there a time limit on chargebacks?

Yes – you have up to 180 days with credit and debit card purchases.

I bought goods quite some time ago and they are now faulty. What can I do?

The Consumer Rights Act 2015 gives you 6 years cover in England and Wales and 5 years in Scotland. It states that goods sold ought to be:

  • Fit for purpose
  • As described
  • Satisfactory quality
  • Last a reasonable length of time

You would usually go to the retailer as your contract is with them under the Consumer Rights Act 2015. If the firm is no longer trading, you can contact the manufacturer instead.

The items may have a manufacturer’s warranty – use that instead if it is still valid.

I have gift vouchers that I have not used. Can I get a refund?

You may be able to still use the vouchers, although it can vary – it is not a certainty. If the stores are still open, spend the vouchers as quickly as possible while you can.

You are treated as everyone else who is owed money and simply put on a long list of creditors.

If you paid by credit card, simply raise a chargeback under Section 75 of the Consumer Credit Act 1974 which holds the card provider jointly liable to refund you if the total value is more than £100.

If you paid by debit card, contact your bank and ask them to raise a chargeback to refund you.

My gift card has been reduced by 50% by the retailer? What are my consumer rights?

Unfortunately, they are limited.

It is very unfair and against the spirit of the contract for gift card holders to be left with 50% less than the original value of the card.

My advice is to spend it as soon as possible while it is actually worth something.

You can raise a chargeback for a full refund with your bank if the gift cards have been paid by debit or credit card within the past 6 months. Section 75 of the Consumer Credit Act 1974 covers you for purchases over £100 with credit cards.

I did not buy the gift vouchers – someone else did. How can I get a refund?

Simply contact the person who did and ask them if they paid for the vouchers by debit or credit card. If so, they can follow the claims procedure above on your behalf.

Christmas gift cards are a popular option, although it’s increasingly risky and one I would not recommend. Just give cash instead.

Have you been affected by a company that has gone into administration? If so, what was the outcome?

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