Bringing a Claim Against a Company in Liquidation: What Creditors Need to Know

First published June 2021 by Steven Wiseglass. Last updated May 2026.

When a company you’re owed money by goes into liquidation, you may think that your chances of being repaid are slim at best. Fortunately, bringing a claim against a company in liquidation is possible. But whether it’s worthwhile or not depends on where you sit in the creditor priority order, what assets are actually available, and whether the legal costs are justified by what you’re likely to recover. 

This guide gives you an honest picture of your options so you can make the right call before committing time and money to a process that may not go in your favour.

Can I Get My Money Back if a Company Goes into Liquidation?

When a company enters liquidation its assets are sold and the proceeds distributed to creditors in a strict legal order. Knowing how to claim money back from a company in liquidation starts with understanding where you sit in that queue. Ultimately, your position determines whether pursuing action is worth it at all. 

Unsecured creditors, which includes most trade suppliers, contractors, and customers, are near the bottom and frequently receive little or nothing.

Priority	Creditor type	Examples
1st	Fixed charge secured creditors	Banks, mortgage lenders
2nd	Liquidation costs	Insolvency practitioner fees, legal costs
3rd	Preferential creditors	Employees (wage arrears, holiday pay)
4th	Secondary preferential	HMRC (certain tax arrears)
5th	Floating charge holders	Asset-backed lenders
6th	Unsecured creditors	Suppliers, contractors, customers
7th	Associated/connected creditors	Directors who loaned money to the company

Each category type must be paid in full before the next on the list receives anything. In the majority of insolvent liquidations, there are insufficient assets to reach unsecured creditors at all. Understanding this before committing to legal action is essential, as the cost of pursuing a claim can easily exceed whatever you recover.

Which Insolvency Procedure was Used?

The procedure used to wind up the company determines what restrictions apply to any claim and whether you can take legal action at all. The three main options — administration, winding up by the court, and liquidation — each have different rules for creditors pursuing money owed to them.

Administration

Putting a business into administration creates a moratorium that prevents the commencement or continuation of legal proceedings against the firm without the consent of the administrators themselves, or a court order. If a claim has already been started, it will automatically be stayed. 

Current insolvency legislation allows an administrator to adjudicate on claims where they intend to make a distribution to unsecured creditors. If the claim is accepted, the creditor will receive the same dividend rate, calculated as a proportion of their admitted claim, as all other unsecured creditors. If the claim is rejected, the creditor can appeal the decision through the insolvency courts.

Winding Up by the Court  

After a winding up order has been made, or a provisional liquidator appointed, it will not be possible for any new claims to be made against the company. In addition, all current claims will also be halted, unless specifically allowed by the court.. If a winding up petition has been presented, but an order has not yet been made, a creditor can apply to the court to stay or restrain any proceedings. 

If permission is requested to bring or continue any action, the court will carry out a balancing exercise, that considers  the interests of the party wanting to proceed against the interests of creditors as a whole. In such circumstances, the onus is on the creditor to demonstrate that proceeding is appropriate.

Liquidation

The liquidation process can be started by a firm’s creditors via the courts (compulsory), or by the company itself via a creditors’ voluntary liquidation (CVL). If the defendant in a claim goes into compulsory liquidation, the process runs exactly the same as the Administration procedure explained above. Should the business go into liquidation voluntarily, there will be no automatic restrictions put in place to prevent any legal action —- although the liquidator is able to apply for one. 

If you are thinking about bringing a claim against a company in liquidation, it is worth considering whether it is better to take legal action, or try to agree the claim with the liquidator themselves. This is because the liquidator has the statutory power to commence or continue proceedings on the company’s behalf. 

Should the company enter into a company voluntary arrangement (CVA), the position on whether a claim can be brought will depend on the terms of the CVA itself. Small businesses that have filed a CVA proposal may be protected by a moratorium, which will prevent any action against the company —- whether a claim has already started or not. 

Although it may be practical to bring a claim against a company in liquidation, this does not necessarily mean that such action is commercially worthwhile. Even if your actions are successful, payment is not guaranteed and will depend on the financial position of the firm. However, if the business has insurance policies in place, it may be possible to take action against the insurer instead.

Advice on Bringing a Claim Against a Company in Liquidation

If you are thinking of bringing a claim against a company in liquidation, there are several practical steps that will give you the best chance of recovering what you are owed — or at least influencing the outcome of the insolvency process in your favour. These include: 

Try to Influence the Process

Administrators and liquidators have the power to investigate a company and the conduct of its directors. Since these processes are often creditor-driven, it is important to remember that you are able to influence and hold these office-holders to account, or even replace them or nominate your preferred choice.

Creditors have the right to attend creditors’ meetings, vote on the liquidator’s proposals, and question the conduct of both the directors and the insolvency practitioner. Providing evidence of misconduct (preferential payments, transactions at undervalue, wrongful trading, etc.) can result in the liquidator pursuing directors personally, increasing the pool of assets available to creditors.

Obtain and Enforce Judgment

It is important to obtain and enforce a judgment against a company that is suspected of having some assets, even if it is unable to pay all of its debts. 

A freezing order can also be granted in extreme cases, if the debtor is suspected of fraud and is attempting to move assets beyond the reach of creditors.

Submit a Proof of Debt

Registering as a creditor by submitting a Proof of Debt is the essential first step. Without it, you will not be recognised as a creditor, cannot vote at creditors’ meetings, and will not receive any distribution from the liquidation. The form must be completed correctly and submitted to the appointed insolvency practitioner promptly. Do not wait to see what happens.

Your proof of debt should include the exact amount owed, the basis of your claim (goods supplied, services rendered, contract breach, or other), and all supporting documentation. This includes:

• Invoices.
• Delivery notes.
• Purchase orders.
• Contracts
• Relevant email correspondence. 

The more evidence you include, the harder it is for the liquidator to reject or query your claim.

If your proof of debt is rejected, you have the right to appeal the decision through the insolvency courts. This is worth considering if the amount is significant and you have strong evidence supporting your claim.

Explore the Insurance Route

If the company held public liability, professional indemnity, or employers’ liability insurance, your claim may survive the liquidation intact. Under the Third Parties (Rights Against Insurers) Act 2010, the company’s rights against its insurer transfer directly to you as the creditor. This means you can pursue the insurer directly, even after the company has been dissolved, provided your claim falls within the scope of the policy.

This route is frequently overlooked by creditors who assume that liquidation ends all prospects of recovery. If the debt arose from negligence, a defective product, or a breach of professional duty, always check whether the company had relevant insurance before concluding that recovery is impossible.

Not sure whether pursuing a claim is commercially worthwhile? Inquesta is a licensed insolvency practice led by Steven Wiseglass — IPA regulated, Fellow of R3, with over 20 years of experience advising creditors on exactly this question. Call 0800 093 4604 for a confidential assessment of your position before you spend money on legal action that may not recover what you’re owed.

What if the Company has Already Been Dissolved?

Can you pursue a claim against a company that has already ceased trading? If the company has already completed liquidation and been struck off the Companies House register, it no longer exists as a legal entity and you cannot pursue it directly. However, two routes may remain available depending on your circumstances.

Restoring the Company to the Register

You can apply to restore a dissolved company to the Companies House register within six years of the date of dissolution. Restoration is only worth pursuing if you have good reason to believe the company had assets that were not properly distributed, or if there is an insurance policy that can be claimed against once the company is restored.

Restoration involves court costs and legal fees and is generally only justified where the debt is substantial and there is a realistic prospect of recovery once the company is back on the register. Once restored, the company is returned to the same position as if it had never been dissolved, and you can recommence recovery action against it.

Pursuing Directors Personally

If a director personally guaranteed the company’s debt to you, their personal liability survives the company’s dissolution entirely. This means you can pursue them individually, regardless of what happened to the company in liquidation.

If there is evidence of misconduct, such as wrongful trading, fraudulent trading, or breach of director duties, the Insolvency Service has expanded powers to investigate and pursue former directors of dissolved companies without the need to restore the company to the register first.

Frequently Asked Questions

Can you sue a company that has ceased trading? If a company has ceased trading but not yet entered a formal insolvency procedure, you can still pursue legal action or issue a statutory demand. If the company owes you more than £750, you can petition the court to wind it up — forcing a formal liquidation process. If the company has already been dissolved, direct legal action is not possible without first restoring it to the Companies House register. 

Acting quickly gives you more options. The longer you wait, the fewer routes remain open.

How long do I have to submit a proof of debt? There is no fixed universal deadline, but you should submit your proof of debt as soon as you become aware the company has entered liquidation. The liquidator will set a bar date and a deadline for submitting claims before any distribution is made. Miss this date and you risk being excluded from any dividend paid to creditors.

If you become aware of the liquidation late, contact the liquidator immediately to establish whether a distribution has already occurred and whether a late claim can still be accepted.

What is a creditors’ meeting and should I attend? A creditors’ meeting is a formal meeting at which creditors are informed about the company’s financial position, can question the directors and insolvency practitioner, and vote on key decisions. This will include who acts as liquidator. 

Attending gives you direct influence over the process. If you are owed a significant sum, attending is strongly advisable. If you cannot attend in person, you can usually appoint a proxy to vote on your behalf. Virtual attendance is now common following changes introduced by the Corporate Insolvency and Governance Act 2020.

Can I bring a claim if I don’t have a written contract with the company? Yes. The absence of a written contract does not prevent you from bringing a claim or submitting a proof of debt. You will need to demonstrate that the debt exists through other means (invoices, email correspondence, delivery notes, bank records showing payment history, or witness evidence). 

The stronger your supporting documentation, the less the absence of a formal contract matters. A liquidator assessing your proof of debt will consider the evidence on its merits rather than requiring a signed contract as a prerequisite.

What is the prescribed part and could it benefit me as an unsecured creditor? The prescribed part is a ring-fenced portion of the assets subject to a floating charge that must be set aside for unsecured creditors before floating charge holders are paid. It was introduced by the Enterprise Act 2002 to ensure unsecured creditors receive something from floating charge realisations. 

The amount is calculated as a percentage of net floating charge assets — 50% of the first £10,000 and 20% thereafter, capped at £800,000. In practice it is often modest, but it is the most likely source of any recovery for unsecured creditors and is worth understanding before assuming you will receive nothing.

How do I find out who the appointed liquidator is? The appointed liquidator’s details are filed at Companies House and are publicly available. Search the company name or number on the Companies House website and look under the insolvency section of the company record. 

A public notice is also placed in the London Gazette when a company enters liquidation, which will name the appointed insolvency practitioner. If you are a known creditor, the liquidator should contact you directly. It is important that you do not rely solely on this though. Check Companies House proactively as soon as you become aware a company you are owed money by may be entering insolvency.

Speak to Inquesta Before Taking Action

Bringing a claim against a company in liquidation is rarely straightforward, and the costs of getting it wrong can exceed whatever you’re trying to recover. 

At Inquesta, we have lived and breathed the insolvency industry for many years, leaving us perfectly placed to assist with all aspects of the process. This is why we have created a free downloadable guide: “A Guide to Putting a Business into Liquidation”. Covering everything from warning signs to a full breakdown of how to liquidate a firm, this handy eBook is a must for business owners. 

Before taking any action, speak to the team at Inquesta. As a licensed insolvency practice led by Steven Wiseglass — IPA regulated, Fellow of R3, over 20 years of experience — we can assess your specific situation honestly, including whether pursuing a claim is worth it at all. Call 0800 093 4604 or fill in our contact form to request a callback as soon as possible.