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Home / News / Business / What to do when a supplier closes down

What to do when a supplier closes down

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               Denisha Maxey

Consumer business by Denisha Maxey

STORIES of companies facing financial difficulties make the news daily. Small businesses merging with larger concerns and vice versa in an attempt to stay financially afloat has become the new norm.
Economic issues have affected commercial entities in a major way and, just like families in many households today, businesses must make tough financial decisions.
Sometimes those decisions include financial action plans to help the company try to maintain financial stability. Sometimes, the solution is to file bankruptcy or go completely out of business.
When a business chooses to file bankruptcy or close its doors, its customers are the ones left holding the bag. Finding that you have made a purchase from a business that has since closed its doors or filed bankruptcy can be a nightmare.


It can seem like a difficult situation but there are ways you can protect yourself as a consumer when facing such circumstances.
If a business has filed chapter-seven bankruptcy under Texas state law, it is obligated to pay its debts to creditors and employees, as well as any taxes owed. The debts are satisfied with profits made from selling the assets of the business.
Unfortunately, when this happens, consumers are the last on the list to receive any money. However, if you have made a purchase from the business with a credit card and have never received your merchandise, you do have the option to file a dispute with your financial institution. If you’ve paid for the purchase with cash or your personal check, you will need to pursue a claim with the court handling the company’s bankruptcy proceedings.
Knowing the difference between a chapter-seven or chapter-11 bankruptcy can also help you explore your options. When a business files under chapter 11, it is still able to operate and its customers might not
be affected.
If you have made a purchase from a company that has since gone officially “out of business” and the purchased item has a warranty, you might still be covered under the manufacturer’s warranty.
If you have an extended warranty, most probably it has been supplied by a third party. The fact that the business that sold you the merchandise has shut down does not affect a warranty administered by a third party, so your merchandise will still be covered.
The worst-case scenario is a business closing its doors while in possession of your items. You might have an expensive item such as an electronic device or a vehicle being repaired, only to find the doors locked when you attempt to retrieve your property. Try to contact the business owner. If all else fails and the cost of the item is less than $10,000, you may file a case in a small-claims court.
Whether you are dealing with a large or small business that has filed bankruptcy or has closed its doors for good, it can be frustrating. Knowing what recourses you have to protect you as a consumer is beneficial and can help you avoid losing out financially.
Denisha Maxey is director of dispute resolution at Houston Better Business Bureau.

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