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Claim money from a bankrupt or company in liquidation
If you are owed money by a bankrupt or a company in liquidation, you have to make a formal claim to recover your money. Claims are paid by selling or disposing of assets. Find out how claims are made and the order in which they are paid.
Who manages your claim?
Bankruptcy/liquidation is a means by which creditors (people owed money) are paid by selling a person or company’s assets (property, shares etc). There is no guarantee that creditors will be paid any or all of the money they are owed.
A ‘trustee’ or ‘liquidator’ will be appointed to manage the sale or disposal of assets and make payments to the creditors. Trustees deal with sole traders and individuals who have been made bankrupt and liquidators deal with companies that have been wound up.
The trustee/liquidator can be either the Official Receiver or an insolvency practitioner (IP). The Official Receiver is an officer of the bankruptcy court and an IP an authorised debt specialist.
Find out who is dealing with your claim
To find out who is dealing with your claim search public records like the Individual Insolvency Register, the records at Companies House or the 'London Gazette'.
If you’ve paid by credit or debit card, you may have additional rights to a refund. Contact your card provider about making a claim.
Registering as a creditor
Within 12 weeks of the bankruptcy/liquidation being declared by the court, the Official Receiver will contact all known creditors. They will either confirm that they will act as the trustee/liquidator or arrange a meeting to appoint one.
Write to the Official Receiver if you have not been contacted. You should do this before a decision is reached about how the debts are being paid or you may lose the right to make a claim.
Appointing the trustee
If there are few assets, the Official Receiver usually acts as trustee/liquidator. If there are significant assets, the creditors vote to appoint a trustee/liquidator, usually an insolvency practitioner.
The Official Receiver will confirm in writing if they are acting as the trustee/liquidator or if creditors need to appoint one at a meeting.
Creditors can force the Official Receiver to hold a meeting to appoint an insolvency practitioner if 25 per cent of the value holding creditors support the move.
How to make a claim?
The trustee/liquidator will send you a proof of debt form which you should complete and return by a specified date. If you do not return the proof of debt form on time you might lose your right to your share of any money available.
Order in which debts are paid
There is a strict order of priority when it comes to paying out any money. The order is as follows:
- secured creditors – they hold a fixed charge or security on an asset
- fees and charges associated with the costs of the insolvency proceedings
- preferential creditors – for example, wages of staff or contributions owed to an occupational pension scheme
- unsecured creditors
- interest payable on any debts
How much will you be repaid?
The trustee/liquidator can accept all, part or none of your claim. They must explain their reasons in writing and you can apply to the court for their decision to be reversed or varied. You should get legal advice if you do this.
The amount you will be repaid can depend on:
- how much can be raised from the sale or disposal of assets, money etc
- the rights of secured creditors – these will be paid first, potentially leaving less money to be shared out between other creditors
- the number of claims received
- how much of your claim is accepted by the trustee/liquidator
Creditors are sent a report estimating the debtor’s assets, debts and what the causes of the bankruptcy/liquidation are considered to be. You should contact the trustee/liquidator if you believe the debtor is withholding any assets.
You can get a list of all creditors and how much they are owed from the trustee/liquidator. Sometimes you can get this information from the bankruptcy/liquidation court files.
Being repaid only some of the money you are owed
If the trustee/liquidator can’t repay the debts in full they will pay out as much as they can. This type of payment is called a ‘dividend’ and the amount you receive will be in proportion to the value of each claim being made.
The trustee/liquidator will confirm in writing to all known creditors who have submitted a proof of debt form if a dividend payment is being made.