A claim against a builder is only useful if there is someone left to pay it. This guide explains the routes the law provides when a builder has become insolvent, closed the company or simply stopped answering. None of them guarantees that money will be recovered. For the claim itself, see the overview of builder disputes.
Who was the contract with?
The first question is the builder's legal identity.
- A sole trader is an individual in business on their own account. GOV.UK describes sole traders as personally responsible for all of the debts of the business.
- A limited company is, in GOV.UK's words, legally separate from the people who own it, so its debts are not normally the debts of its directors. In a company limited by shares, the shareholders' liability is limited to the amount, if any, unpaid on their shares (section 3 of the Companies Act 2006).
Companies House can be searched free of charge for a company's registered address, officers and insolvency information.
A company in liquidation or administration
In a liquidation the company's assets are sold and the proceeds shared among the people it owes. In an administration an insolvency practitioner takes control of the company. In either, a customer with a claim is usually an unsecured creditor: one with no security over the company's property.
GOV.UK's guidance for creditors sets out a strict order of priority: the costs of the insolvency, secured lenders and preferential creditors such as employees owed wages come ahead of unsecured creditors. If full repayment is not possible, creditors receive a dividend in proportion to their claims, and the guidance says that if there are few assets a creditor may receive nothing.
A creditor claims by submitting a proof of debt to the liquidator or administrator (rule 14.3 of the Insolvency (England and Wales) Rules 2016). GOV.UK guidance on bankruptcies and compulsory liquidations says, at the time of writing (October 2026), that a proof of debt form is needed where more than £1,000 is owed.
Insolvency also restricts court claims against the company:
- Compulsory liquidation. Once a winding-up order has been made, no action or proceeding may be started or continued against the company except by leave of the court (section 130(2) of the Insolvency Act 1986).
- Administration. No legal process may be instituted or continued against the company except with the administrator's consent or the court's permission (paragraph 43(6) of Schedule B1 to the 1986 Act). This is the moratorium.
A dissolved company
A company that has been dissolved, whether after being struck off the register or at the end of a liquidation, no longer exists and cannot be sued as it stands. Any property it still held is deemed to be bona vacantia (ownerless property) and belongs to the Crown or, in some cases, the Duchy of Lancaster or the Duke of Cornwall (section 1012 of the Companies Act 2006).
A court can restore a dissolved company to the register. Those who may apply include a creditor of the company at the time of its dissolution and any person with a potential legal claim against it (section 1029). For a claim of the kind this guide covers, the application may not be made more than six years after the date of dissolution (section 1030(4)). Restoration does not put money into a company that had none.
The builder's insurer
The Third Parties (Rights against Insurers) Act 2010 applies where the person liable is insured but insolvent. Where a 'relevant person' is insured against a liability, their rights against the insurer in respect of that liability transfer to the person to whom the liability is owed (section 1). A company in administration or liquidation, a dissolved company and an individual subject to a bankruptcy order are all relevant persons (sections 4, 6 and 6A).
The third party may bring proceedings against the insurer without first having established the builder's liability, and can ask the court for declarations about both the builder's liability and the insurer's (sections 1 and 2). The liability must be established before the rights can be enforced. Schedule 1 allows a person who reasonably believes they have such a claim to request information including whether a policy covers the liability, who the insurer is and what its terms are.
The Act transfers only the rights the builder had under the policy. On the builder's liability, the insurer may rely on any defence the builder could have relied on (section 2(4)), and cover depends on the policy wording. A policy that covers damage a builder causes to a customer's property does not necessarily cover the cost of redoing the builder's own defective work.
Guarantees, deposit protection and new-build warranties
- Insurance-backed guarantees. These are insurance policies intended to stand behind a contractor's own written guarantee if the contractor has ceased trading. Whether one pays out depends on the wording of the policy.
- Deposit protection. Citizens Advice notes that some traders hold insurance that protects a customer's deposit if the trader goes out of business, and that others use an escrow scheme, where the deposit is held in a neutral account.
- New-build warranties. The Financial Ombudsman Service describes building warranties as policies covering major problems with newly built or converted homes, usually lasting 10 years.
A complaint about how an insurer has handled a claim goes to the insurer and then to the Financial Ombudsman Service.
If the work was paid for by credit card
Under section 75 of the Consumer Credit Act 1974, a customer who paid a supplier by credit card has a like claim against the card provider for the supplier's breach of contract or misrepresentation. The two are jointly and severally liable, meaning either can be pursued for the whole claim. At the time of writing (October 2026), section 75 does not apply to a claim relating to a single item with a cash price not exceeding £100 or more than £30,000. Financial Ombudsman Service guidance says it is the cash price that matters, not the amount put on the card, and that debit cards are not covered. The claim is made to the card provider. A complaint about the provider's handling of it goes to the provider and then to the Financial Ombudsman Service, and is not something CasePoint deals with.
A bankrupt sole trader
After a bankruptcy order, a creditor with a provable debt has no remedy against the bankrupt's property or person for that debt, and may not start legal proceedings against the bankrupt before discharge without the court's leave (section 285(3) of the Insolvency Act 1986). The creditor proves in the bankruptcy instead.
A bankrupt is normally discharged one year after the bankruptcy began (section 279). Discharge releases the bankrupt from the bankruptcy debts (section 281(1)), although not from a bankruptcy debt incurred in respect of any fraud to which the bankrupt was a party (section 281(3)). The Individual Insolvency Register on GOV.UK can be searched by name or trading name.
A builder who has simply disappeared
Silence is not insolvency. A court claim can still be brought against a person or company that exists, but a judgment is only as useful as the assets available to meet it. Time limits still apply: see how long there is to claim.
Citizens Advice says a report to Trading Standards is made by contacting the Citizens Advice consumer service, and that Trading Standards can take businesses to court or stop them operating but will not help an individual get a refund.
What a solicitor will want from you
- The quote, contract and invoices, showing the exact name of the person or company you dealt with.
- Companies House or Individual Insolvency Register details, and the name of any liquidator, administrator or trustee who has written to you.
- Proof of what was paid and how.
- Any guarantee, warranty or deposit protection certificate, and any insurance details the builder gave.
- A record of the state of the work and the cost of finishing or repairing it.
This guide is general information about the law of England and Wales. It is not legal advice. Whether anything can be recovered from an insolvent builder, an insurer or a card provider depends on the facts and the documents, and time limits apply.
Frequently asked
Can I claim against the director personally if the building company has gone bust?
Not normally. A limited company is legally separate from the people who own and run it, and its debts are the company's debts. Whether a director is personally liable in a particular case, for example because they gave a personal guarantee, depends on the facts.
What happens to my claim if the builder's company is in liquidation?
You are an unsecured creditor and can submit a proof of debt to the liquidator. Unsecured creditors are paid after the costs of the insolvency and after secured and preferential creditors, and GOV.UK guidance says that if there are few assets a creditor may receive nothing. Once a winding-up order is made, court proceedings against the company need the court's permission.
Can I claim on the builder's insurance?
The Third Parties (Rights against Insurers) Act 2010 transfers an insolvent or dissolved builder's rights under a liability insurance policy to the person the builder is liable to. Whether the insurer has to pay depends on the terms of the policy, and a liability policy may not cover the cost of redoing the builder's own defective work.
Does it help that I paid by credit card?
It can. Section 75 of the Consumer Credit Act 1974 makes the card provider jointly liable for the builder's breach of contract where the cash price was more than £100 and not more than £30,000 (the limits at the time of writing, October 2026). The claim is made to the card provider, and it does not apply to debit card payments.