What the ACCC does

  • We can provide information about how a business going bust can affect consumers' legal rights.

What the ACCC can't do

  • We don’t provide information about insolvency laws. This is the role of ASIC.
  • We don't provide advice about the administration of particular businesses that have gone bust. This is the role of the external administrator appointed in each case.
  • We don’t provide legal advice.

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Impact of insolvency on consumer rights

When a business goes bust and can’t pay its debts on time, this is called insolvency.

Someone from outside the business, known as an external administrator, is appointed to try to save the business, sell the business, or to wind it down and try to repay its debts.

‘Insolvency practitioners’, ‘voluntary administrators’, ‘liquidators’ and ‘receivers’ are all types of external administrators.

When a business becomes insolvent and an administrator is appointed, consumers’ legal rights are affected and they can be left out of pocket.

Insolvency affects a consumer’s entitlements when they:

  • bought a product that doesn't meet consumer rights, known as consumer guarantees
  • have a warranty issue
  • have paid for a product or service not yet received
  • have a gift card or credit note.

Checking if a business has become insolvent

Search by company name or number on the ASIC published notices listing, to check:

  • whether a business has become insolvent
  • who has been appointed as an administrator.

Occasions when consumers are owed money

Consumers are owed money by a business that has become insolvent when they:

  • paid in full for a product or service that hasn't yet been received
  • paid a deposit, such as in a lay-by agreement or interest-free offer
  • have a credit note, gift card or voucher from the business with an amount left on it.

Things to do if you are owed money

    There are several things you can do to try to get your money back when you are owed money by a business that has become insolvent.

    Understand who gets repaid first

    There are rules in laws administered by the Australian Securities and Investment Commission (ASIC) about the order in which an insolvent business’s debts must be paid.

    Usually, under these rules, consumers fall in a category called ‘unsecured creditors’.

    Unsecured creditors are only repaid after secured creditors, such as the business’s bank and major suppliers, are repaid and after priority unsecured creditors, such as employees are repaid. This means consumers may only get some of their money back or nothing at all.

    Ask your bank to reverse the payment

    If you paid with a loan, credit card, debit card or through a secure payment provider such as PayPal, your financial institution or card provider may be able to get your money back by reversing the payment. This is known as a ‘chargeback’. There are time limits on chargebacks, so contact your financial institution straight away.

    Check if your transaction can be honoured

    Sometimes, businesses under administration continue trading.

    During this time they may:

    • deliver a product or service you have paid for, or
    • honour some offers or transactions, such as gift cards or lay-bys.

    The administrator may place specific conditions on honouring transactions. For example, only honouring gift cards if people spend an equivalent amount on products or services to the amount redeemed on the gift card transaction.

    Sometimes, an administration process may result in the sale of the business that has gone bust to a new business. Where this happens, the new business is generally able to choose what liabilities of the old business it will take on. For example, the new business may or may not agree to honour all outstanding credit notes.

    Check the administrator’s announcements, or the announcements of the new business that has purchased the business that went bust, and follow any instructions they give you.

    Register as a creditor

    If the company has stopped trading, you must register as an unsecured creditor with the administrator to have a chance of getting some or all of your money back. This includes where the business that went bust is sold to a new business who does not agree to take on all of the old business' liabilities.

    Apply for compensation where a fund exists

    In some states and territories, there may be funds that compensate consumers who lose money when a business in a particular industry becomes insolvent.

    Contact your state or territory consumer protection agency to find out if there are any funds you could apply to.

    Things to do if you have a problem with a purchased product

    The things you can do if you have a problem with a product purchased from a business that went bust will depend on the circumstances.

    If the business continues to trade under administration, the business should provide a solution in line with the consumer guarantees. You can contact the administrator for help in contacting the business.

    If the business is sold to a new business in the administration process, as part of the sale, the new business may or may not agree to deal with issues from products bought before it purchased the business that went bust. Check the administrator’s announcements, or the announcements of the new business that has purchased the business that went bust, to find out.

    If the manufacturer of the product is a different business from the one that went bust, you can contact them to try to seek a solution from them.

    Next steps if you have a problem with an insolvent business

    If you need to resolve a problem with an insolvent business, your first step is to contact the administrator to explain the problem.

    If the administrator won’t help you, contact ASIC on 1300 300 630. ASIC administers the laws about insolvent companies. It does not resolve individual disputes but can give you information about consumers’ rights with insolvent businesses.

    You can find out more about your rights as a creditor on the ASIC website.

    Go to the ASIC website

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