While many Western Australian businesses have re-opened and returned to ‘business as usual’, there are fears some will not survive the financial impact of the COVID-19 coronavirus pandemic.

When a business closes its doors, consumers often call Consumer Protection with concerns about money paid for goods or services that are yet to be received, or unspent gift vouchers or credit notes.

How consumers and creditors are affected when a business goes bust depends on the circumstances of each case.

If the business is a company, it becomes insolvent and can be put into voluntary administration where steps are taken to save it. Should that fail, the next step is often liquidation where the company’s affairs are wound up in an orderly way and assets distributed to secured creditors.

When it comes to sole traders, the rules are different – because the business is tied to the individual owner’s income, the individual would declare personal bankruptcy.

If there is money left after paying secured creditors such as employees and loan providers, you as a consumer are an unsecured creditor who may have the option of either claiming your products or trying to get your money back.

To claim your products, you must have paid in full (or pay the liquidator the balance) and have a receipt or some other proof of purchase.

Should you want a refund and paid by credit card, contact your card provider and request a chargeback as soon as possible because time-limits apply. If you didn’t use a credit card or are unable to claim the product, you can register with the administrator or liquidator as an unsecured creditor.

With a number of businesses facing financial difficulty during these uncertain times, Consumer Protection advises consumers to reconsider the purchase of gift-cards.

To find out who the administrator or liquidator is, visit the insolvency notices on ASIC’s website. You can also find out through newspapers or on the company's website.

For further information, contact Consumer Protection on 1300 30 40 54 or consumer@demirs.wa.gov.au or see our Insolvency page.

Lanie Chopping

Commissioner for Consumer Protection