If a business has your money or goods and goes bust, what can you do?

With a few shops closing down or going out of business you might be worried about goods you have taken in to be repaired, bought on credit or are paying off on layby. And if you have a deposit on goods or services or an unused gift voucher, you may be worried about being out of pocket too.
When you get goods repaired, they still belong to you – as long as it's possible to identify your goods and pay for the repairs.
For goods you have at home and are still paying off on credit, the finance was probably arranged through a finance company that is separate from the business you bought the goods from. You will still have to make the payments to the finance company, but you won't be at any risk of losing your goods.
When you buy goods on layby you have special protection under the Layby Sales Act. As long as you made a payment in the three months before bankruptcy, liquidation or receivership proceedings began, you can pay the rest of the purchase price and take the goods away. If there aren't enough of those goods to go around then, you have priority over buyers who bought later than you. If there aren't any goods available, then you will be a creditor with greater rights to get money back than unsecured creditors and some secured creditors.
However, if you have a deposit on goods or services that are not received yet, you become an unsecured creditor when the business closes. If you have unused gift vouchers and the business is liquidated then you also become an unsecured creditor. This means that it is unlikely that you will get your goods or money back or be able to use your gift vouchers.

What about getting your money back?
There are strict laws about which creditors get paid first. Secured creditors have an agreement that if their money is not paid back then the creditor or liquidator can sell business assets to get the money. Secured creditors generally get paid out before unsecured creditors. Often there is not enough money left over for unsecured creditors.

How to get your money back
You may be able to get money back if the business is sold to a new owner, but even if the trading name stays the same, it doesn't mean the company or person who owns it remains the same. Often a new owner will buy the business's name, property and assets but not its debts or liabilities.
If the closed business is a company then check the companies register at www.companies.govt.nz to see if the company is in receivership or liquidation. This can take seven to 10 days to be updated with new information. Get in contact with the receiver or liquidator to register a claim. Claims need to be in writing and provide evidence of what you are owed, for example, a receipt.
If the business was not a registered company the trader is likely to be personally responsible for returning your money. You can claim money back at the disputes tribunal or court. However, if the trader has declared bankruptcy you will need to make a claim with the Insolvency and Trustee Service. Check if the trader has declared bankruptcy and file a claim on the Insolvency and Trustee Service website www.insolvency.govt.nz

Find out more at www.consumeraffairs.govt.nz or from your local Citizen's Advice Bureau.
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