central heating company in liquidation

[Tedx]

Morning folks

I'm asking on behalf of a friend. I've only briefly read over the documents that they have sent me. Essentially They have placed an order for central heating with a company. They paid a deposit of 2800 pounds and then waited for the company to arrange a fitting date.

Just yesterday they received a letter from the liquidators advising the company was seeking to go into voluntary liquidation and asked for details of money that my friend I paid or was owed. They have basically until the end of next week to get this information completed and sent.

It basically said that if the voluntary liquidation failed then compulsory liquidation would happen.

My heart sank for them when I heard this but then they said the paid the 2800 pounds with their credit card and I was thinking there might be some sort of benefit there?

As usual any thoughts or advice welcome.

Apologies for the spelling mistakes I have forgotten my glasses and I'm talking this into my phone. Thanks again

[mc2fool]

My heart sank for them when I heard this but then they said the paid the 2800 pounds with their credit card and I was thinking there might be some sort of benefit there?

Yep, google for section 75. Basically the credit card company and retailer are jointly liable, so whatever they don't get back from the liquidation they'll be able to get back from the credit card company.

[jaizan]

One reason to always pay deposits with credit cards.

[BullDog]

Lucky that they paid on a credit card. Always do so.

I had a company go into liquidation after I had paid for a new bathroom suite, but before it was delivered. I got my money back from the credit card issuer, no problem.

[monabri]

Paid by Credit Card - Section 75 applies up to £30k in England, Wales & Scotland.

Just check they didn't pay by Direct Debit via a card?


https://www.moneyhelper.org.uk/en/every ... ay-by-card

[mc2fool]

Lucky that they paid on a credit card. Always do so.

I had a company go into liquidation after I had paid for a new bathroom suite, but before it was delivered. I got my money back from the credit card issuer, no problem.

I'm curious, and I'm sure it'd be helpful to the OP, to hear about how that actually worked in relation to the liquidation.

Normally when a company goes into liquidation people that it owes money to register with the liquidators as a creditor, who will try and sort out the company's finances and give back to the creditors whatever is possible to recover, which may come in drips and drabs over a period (and may be zero).

I expect that the credit card company would only top up what you got back from the liquidation, which could take a long time (sometimes many years) to finalise. So did you have to wait for that and then claimed the remainder from the credit card company, or were they willing to pay you the whole lot up front and have you sign over your rights as a creditor, so they got whatever the liquidators handed out?

[Tedx]

It was definitely credit card.

I have passed the info over and will try to pass on the outcome where possible

[SebsCat]

Lucky that they paid on a credit card. Always do so.

I had a company go into liquidation after I had paid for a new bathroom suite, but before it was delivered. I got my money back from the credit card issuer, no problem.

I'm curious, and I'm sure it'd be helpful to the OP, to hear about how that actually worked in relation to the liquidation.

Normally when a company goes into liquidation people that it owes money to register with the liquidators as a creditor, who will try and sort out the company's finances and give back to the creditors whatever is possible to recover, which may come in drips and drabs over a period (and may be zero).

I expect that the credit card company would only top up what you got back from the liquidation, which could take a long time (sometimes many years) to finalise. So did you have to wait for that and then claimed the remainder from the credit card company, or were they willing to pay you the whole lot up front and have you sign over your rights as a creditor, so they got whatever the liquidators handed out?

My understanding is that the CC company is jointly and severally liable so you have a valid claim for the full amount against either the supplier or CC company. Once it is clear that the supplier is not able to either fulfil the contract nor return the deposit in a timely manner then you can claim the full amount from the CC company.

From https://www.moneysavingexpert.com/recla ... purchases/

The law makes clear that both retailer and credit card company are jointly responsible for Section 75 claims.

It might be easier to first complain to the retailer in some instances – for example if you're looking for a repair or a replacement rather than a refund – but you don't have to.

If the retailer has gone bust, or is overseas, for example, you can bypass it and go direct to your credit card provider. Make sure your claim goes to the right place – if you have an HSBC Mastercard, for example, you should contact HSBC, NOT Mastercard.

FWIW, the only time we experienced this was ages ago when MFI went bust and we claimed the full deposit from our CC company which they paid without a murmur.

[Tedx]

You could argue that it creates a moral hazard for the failed vendor. My company is going down the tubes but if you Pay by credit madam, I can sleep at night knowing you won't be out of pocket (assuming the vendor has a conscience....)

[mc2fool]

My understanding is that the CC company is jointly and severally liable so you have a valid claim for the full amount against either the supplier or CC company. Once it is clear that the supplier is not able to either fulfil the contract nor return the deposit in a timely manner then you can claim the full amount from the CC company.

From https://www.moneysavingexpert.com/recla ... purchases/

The law makes clear that both retailer and credit card company are jointly responsible for Section 75 claims.

It might be easier to first complain to the retailer in some instances – for example if you're looking for a repair or a replacement rather than a refund – but you don't have to.

If the retailer has gone bust, or is overseas, for example, you can bypass it and go direct to your credit card provider. Make sure your claim goes to the right place – if you have an HSBC Mastercard, for example, you should contact HSBC, NOT Mastercard.

Yes, but I doubt that means you can double-dip, i.e. get the full refund from the credit card company AND register as a creditor of the company in liquidation and get back whatever is recovered from them.

If the CC company pays you in full early on then it'd be surprising if they didn't want to stand in your place as a creditor so they could get recover at least something of the money they paid you.

FWIW, the only time we experienced this was ages ago when MFI went bust and we claimed the full deposit from our CC company which they paid without a murmur.

So, if you remember, did they ask you to sign over your rights as an MFI creditor?

[mc2fool]

P.S. Actually it looks like the CC company becoming a creditor of the supplier is automatic...

"(2) Subject to any agreement between them, the creditor [the CC company] shall be entitled to be indemnified by the supplier for loss suffered by the creditor in satisfying his liability under subsection (1), including costs reasonably incurred by him in defending proceedings instituted by the debtor." https://www.legislation.gov.uk/ukpga/1974/39/section/75

[BullDog]

As requested, just to clarify - Once I had raised the issue of the supplier going into liquidation with the cc company, within a few days the cc company simply refunded my money. I guess there's back office procedures about such things.

[swill453]

Just check they didn't pay by Direct Debit via a card?

Direct Debits are something completely different, and don't involve cards at all.

Perhaps you were thinking of debit/credit card continuous authority?

Scott.

[SteelCamel]

If the CC company pays you in full early on then it'd be surprising if they didn't want to stand in your place as a creditor so they could get recover at least something of the money they paid you.

They don't need to "stand in your place" - they (or a connected company) will have the right to recover any amounts they refund under the agreement the merchant has with their card processor. As soon as the card company pays you, the merchant owes the card company a debt under that contract, so the card company is a creditor in their own right. You are no longer a creditor of course as you have your money in full.

[mc2fool]

If the CC company pays you in full early on then it'd be surprising if they didn't want to stand in your place as a creditor so they could get recover at least something of the money they paid you.

They don't need to "stand in your place" - they (or a connected company) will have the right to recover any amounts they refund under the agreement the merchant has with their card processor. As soon as the card company pays you, the merchant owes the card company a debt under that contract, so the card company is a creditor in their own right. You are no longer a creditor of course as you have your money in full.

You mean as per viewtopic.php?p=665785#p665785

[U962]

You could argue that it creates a moral hazard for the failed vendor. My company is going down the tubes but if you Pay by credit madam, I can sleep at night knowing you won't be out of pocket (assuming the vendor has a conscience....)

Yes - that's the net effect
Just like many are not bothered about being scammed these days - the bank just refunds them
Many are not bothered about the safety of their bank deposits - if its less than 85K then the FSCS will refund them which results in an even worse situation where dodgy firm A claims they have FSCS protection when they don't.
And as you say the rule is pay by credit card then if anything goes wrong shrug your shoulders and send the credit card company the bill. Indeed bizarrely if you only pay a bit by the card and the rest by another way you are still covered for the full amount and not just the bit you paid by the credit card.

It all gets a bit more complicated where there is a third intermediary party involved so don't pay via Paypal which then deducts it via your paypal account from your stored credit card with them - where it appears that you may NOT be covered in this situation. Meanwhile some argue that this is no different from a merchant dealing with a third party to manage their financial card transactions rather than the credit card firm direct. The difference being that you the consumer have no idea in many cases that this is happening and have no option to require the transaction be direct between the merchant and the CCard firm unlike you CHOOSING to use Paypal.

Of course all this is paid for by someone. Levy's on financial firms to pay for the FSCS ultimately passed on to savers and investors by way of lower returns and huge interest rates paid by the poor on credit cards.

[Dicky99]

Of course all this is paid for by someone. Levy's on financial firms to pay for the FSCS ultimately passed on to savers and investors by way of lower returns and huge interest rates paid by the poor on credit cards..

So an insurance premium where the cost correlates with the value of purchases transacted.

[Tedx]

Well you could argue that having insurance comes with it's own moral hazards

[Mike4]

Well you could argue that having insurance comes with it's own moral hazards

Which reminds me of an incident many years ago when a scrote attempted to steal my Ford Cosworth. He approached me as I was getting in, saying "Hand over those keys mate". I was all like "You're kidding!" He said "It's ok, your insurance will pay you back, you do have insurance don't you?"

He was clearly justifying to himself that stealing cars was ok!

Anyway during the convo I was able to start the engine and drive off, but it was a thought-provoking episode about moral hazard.

[mc2fool]

Well you could argue that having insurance comes with it's own moral hazards

Yeah, guess where the term came from ...

"“Moral hazard” refers to the risks that someone or something becomes more inclined to take because they have reason to believe that an insurer will cover the costs of any damages.

The concept describes financial recklessness. It has its roots in the advent of private insurance companies about 350 years ago. Soon after they began to form, it became clear that people who bought insurance policies took risks they wouldn’t have taken without that coverage."
https://sc.edu/uofsc/posts/2023/03/conversation_moral_hazard.php