If a client or agency goes out of business

You may be contacted automatically by the official receiver or insolvency practitioner if he or she knows that you are a creditor. However, if you believe a company may be subject to insolvency proceedings and you have not been contacted you can search Companies House online to see if they are in liquidation (the free search facility will inform you of this) or you can contract the Insolvency Enquiry Line on 0845 602 9848, who will be able to confirm whether the company is in liquidation and assist you in registering yourself as a creditor.

If the company is in liquidation the company may have enough assets to pay all of its creditors (i.e. it is solvent). However, if it is insolvent the liquidator will attempt to ascertain how much money, if any, will be able to be used to pay creditors.

A report will give you information about the assets and liabilities of the company and the circumstances of the insolvency. You will be notified automatically of any distribution of money or that no money is available and that the case is to be closed.

This process can take time and it may be several months before you hear anything. You should also be aware that as a contractor you are far down the list in priority for receiving funds. After secured creditors are repaid the fee and charges of the liquidation are deducted from the remaining assets and then preferential creditors paid – this includes the wages owed in the four months prior to the insolvency order as well as contributions to pension schemes.

Therefore in many cases you may not receive back 100% of your debt. If this is the case payments are made to creditors by way of a dividend in proportion to the value of each claim.