Liquidations
N.B. please read carefully
The material in the FAQs below provides general information on liquidations. It is important to note that liquidations are extremely complex and the NCA is not in a position to provide a comprehensive guide on all aspects of the liquidation process.
You should seek legal advice if significant amounts of money are owed, or if you are unsure about your status regarding a company that has gone into liquidation.
Q1. What entitlements do I have if a retailer goes into liquidation?
Consumers have very limited rights in cases where a retailer/trader/service provider goes out of business. Consumer rights under the Sale of Goods and Supply of Services Act 1980 (SGSSA) would not apply. The consumer's contract is with the retailer, i.e. the person from whom the goods or services had been purchased. The obligations placed on traders under the SGSSA relating to redress in respect of faulty goods / services do not transfer to the liquidator /receiver.
In cases where a trader/retailer goes out of business, there is a very strong possibility that consumers who have paid deposits for goods or who have purchased goods and are awaiting delivery of the items, are unlikely to have their deposits refunded or their prepaid orders filled.
Usually when a trader goes out of business it owes money to a number of interests. Under the liquidation procedure, priority is given to what is termed "secured creditors" such as banks and other lending institutions and to "preferential creditors" such as the Revenue Commissioners and employees who may be owed wages.
The consumer is treated as an "unsecured creditor". This means that he/she joins a queue behind the "secured creditors" and "preferential creditors". The consumer's claim will be met or partially met, from what is left of the liquidated assets, once the liabilities to the secured and preferential creditors are met.
The costs of the liquidation will also have to be taken into account before the consumer's claim is considered. All unsecured creditors must first prove what sums are due to them from the company in liquidation. Claims should be put in writing to the liquidator.
Q2. Can I get redress if a trader goes into liquidation, other than through the liquidation process?
Consumers may get redress or compensation in certain circumstances:
- If the business that has gone into liquidation were a subsidiary of a larger company, it may be possible to claim directly from the parent company
- If the company in liquidation is the supplier to the retailer rather than the retailer, the consumer - whose contract is with the retailer - should be able to seek redress from the retailer
- In a case where the consumer has been given a guarantee by the manufacturer, he/she would have the right to make a claim against the manufacturer if the goods purchased by the consumer were found to be faulty
- In certain circumstances consumers who pay for goods by credit or debit card may be able to claim against the retailer under the payment card processing rules. Consumers should contact their card issuer to find out more about seeking a refund through the payment card chargeback process. It is important that consumers contact their card issuer directly, the number of which is usually on the back of the relevant payment card
Q3. What precautions can I take to reduce or limit the risk of financial loss in the event of a business going into liquidation?
There are some precautions which consumers could take:
- Try and avoid long delays in delivery times, once a deposit has been paid or an upfront payment made
- Before placing a deposit, check with the seller on how long it would take before the goods can be delivered
- Do not pay in full for items if there is a long delivery period involved
- If you have paid for expensive items, don’t ask the retailer to hold, or store them for you for indefinite periods. (Occasionally consumers have asked retailers to store items as part of the deal, particularly in cases where they are in the process of buying or changing their house or apartment)
- When goods are delivered, check immediately for possible faults and that they are in fact the items you paid for
- Think carefully before deciding to pay in advance for goods
- If possible, pay by credit card or by laser card
- If the retailer goes into liquidation and your goods have not been delivered, contact the liquidator for information
- Find out if the company is a subsidiary or stand alone company. You can get this information from the Liquidation section of the Companies Registration Office
- Don’t hold on to credit notes or gift vouchers for too long
- Remember that the only opportunity of your getting your money back in respect of credit or gift vouchers will be as an “unsecured creditor” under the liquidation process
Q4. What is a "liquidation sale"?
As part of the liquidation process, the liquidator may hold a "liquidation sale". Consumers should be aware that they cannot avail of this opportunity to redeem money owed to them either through:
- Deposits on goods
- Non delivery of products
- Credit notes, or
- Gift vouchers
Q.5. Can consumers who are owed money benefit from a liquidation sale?
No. The only avenues open to consumers for getting their money back are outlined above.
Q6. What can I do if a product I've bought at a liquidation sale turns out to be faulty?
Consumers should be aware that if they buy items in a liquidation sale and the goods subsequently turn out to be faulty, they cannot seek redress under the provisions of the Sale of Goods and Supply of Services Act 1980.
It is possible however, that redress may be obtained through a concept known as a "Collateral Contract". What this means is that a manufacturer may have a liability to the consumer even where the manufacturer did not supply the goods direct to the consumer.
Where the product has a guarantee, it may be possible to interpret the guarantee as contractually binding; therefore the manufacturer will be bound by its terms. The Agency would strongly advise a consumer to return the guarantee registration card as this has the effect of creating a legal relationship, under the guarantee, with the manufacturer. This relationship can then be relied upon to assert rights under the guarantee's provisions.
Q7. Should I be wary when buying liquidation items from occasional traders?
Occasional traders often buy up liquidation stock. They then hold "liquidation sales" in venues throughout the country, usually for one day, at a local hotel.
Consumers should be alert to the possibility, that if they buy items at these sales, and the items are subsequently found to be faulty, the chances of getting redress, (either through, repair, replacement or refund) are remote. Consumers are urged to be cautious and don't buy on impulse. In particular they should:
- Find out as much as possible about the trader preferably in advance of the sale
- Ask them if they have a permit from the Department of Enterprise Trade and Employment,
- Examine the goods carefully
- Think carefully before making a purchase
- Ask themselves do they really need the item/ items
- Check is the bargain worth the risk if things go wrong
- Find out when the item will be delivered
- Clarify what arrangements, if any, are in place for delivery of the goods (if large items are involved)
- If possible, pay by credit card or laser card
- In the case of large fragile expensive items, check that proper arrangements are in place to ensure safe delivery
Learn more
Information on the liquidator for the company can be obtained by contacting the Companies Registration Office (CRO). Once you have established the name and address of the liquidator then write to both him / her AND the trading address of the company in question outlining your concern.
Companies Registration Office
Parnell House
14 Parnell Square
Dublin 1
Tel: 01 8045200
LoCall: 1890 220 226
Fax: 01 8045222
Email: info@cro.ie
Related links
Read some tips on paying deposits
Gift vouchers: learn more about your entitlements
Read the NCA shopping guides
More FAQs
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