By: Money Navigator Research Team
Last Reviewed: 15/01/2026
FACT CHECKED
Quick Summary
Card disputes usually do not stop just because a business enters administration or liquidation. Customers can still raise chargebacks (a card-scheme process) and, for some credit-card purchases, may pursue section 75-type claims via their card provider.
The operational difference is on the merchant side: insolvency often limits access to records, changes who can respond (administrator or liquidator), and can prompt acquirers/processors to hold back funds as risk cover for disputes that may arrive later.
This article is educational and not financial advice.
First: card disputes are often “issuer-led”, not merchant-led
A card dispute typically starts with the cardholder and their bank/lender (the issuer). The issuer may then use the card scheme’s dispute process to try to recover funds from the merchant’s acquiring chain.
Two widely referenced routes in the UK are:
Chargeback (scheme process; not a statutory right): UK Finance explains chargeback and typical time limits (often around 120 days, depending on circumstances and scheme rules) in its Chargeback rights and section 75 FAQs. The FCA also notes in its consumer refunds guidance that chargeback is not a statutory right and references typical timing expectations in its finalised guidance on cancellations and refunds.
Section 75-related claims (credit cards; legal route with conditions): The Financial Ombudsman Service outlines how it looks at complaints involving section 75 and chargeback in Problems with goods and services: section 75 and chargeback, and MoneyHelper summarises how section 75 and chargeback work (including the well-known £100–£30,000 purchase range for many credit-card section 75 claims) in How section 75 and chargeback protection work.
Why that matters in insolvency: even if the merchant is in formal insolvency, the dispute can still be processed by the issuer and scheme; the merchant’s ability to respond is what often changes.
Administration vs liquidation: why the dispute experience differs
Administration (often aims to rescue or restructure)
Administration is a formal process where an administrator takes control of the company and runs it during administration. GOV.UK summarises the basics in Put your company into administration.
Dispute implications: a business can sometimes keep trading while in administration, which means card acceptance and fulfilment might continue (though not always).
Disputes may relate to pre-administration orders, cancellations, non-delivery, or post-administration trading depending on what continues and what changes.
Liquidation (winding up)
Liquidation is the process of winding up a company, selling assets, and using proceeds to pay debts. GOV.UK’s overview is in Liquidate your limited company.
Dispute implications: liquidation is commonly associated with trading stopping (particularly in insolvency-led liquidation). That can increase “goods/services not received” disputes if orders were outstanding when trading ceased, and it can reduce the practical ability to gather evidence quickly if systems, staff access, or banking access change.
The typical “flow” of a dispute after insolvency begins
Even though schemes and providers vary, the workflow often looks like this:
Cardholder raises a dispute with their card provider (issuer).
Issuer assesses eligibility (reason code, evidence, time limits) and may initiate chargeback or handle a section 75-style claim. The Financial Ombudsman Service describes the concept and evidential expectations at a high level in its section 75 and chargeback page.
Scheme process runs (chargeback/representment cycles) where applicable. Visa gives a consumer-facing overview of chargeback and timing uncertainty in Chargeback purchase disputes.
Merchant/acquirer response window applies. If the merchant cannot respond (because control/access sits with an administrator/liquidator, or records are unavailable), the dispute may be harder to contest.
Financial impact lands upstream: if a chargeback is upheld, the merchant’s acquiring chain typically debits the merchant account (or offsets against settlement), which can matter a lot when insolvency is already constraining cashflow.
Why acquirers and processors often tighten risk controls when insolvency starts
From the acquiring/processing perspective, insolvency can increase uncertainty about:
whether refunds can be processed smoothly,
whether disputes will rise (especially for undelivered services),
whether the merchant can respond with evidence,
whether negative balances can be recovered.
That is why you may see behaviour that resembles “freeze-era” controls – reserves rising, payouts delayed, or settlement being held back as risk cover. If you want the freeze-specific mechanics (separate from insolvency), see Rolling reserves explained: why they rise during a freeze.
In insolvency, the “control shift” (administrator/liquidator running the business) can also create practical problems: staff access, inbox access, order systems, and historic logs may be disrupted just when evidence is needed.
Summary table
| Scenario | Outcome | Practical impact |
|---|---|---|
| Business enters administration and continues trading | Disputes may split across “pre” and “post” insolvency events | Evidence gathering can be complex; customer communications may change; dispute volumes can vary by sector |
| Business enters liquidation and stops fulfilling | “Not received / not provided” disputes become more common | Higher dispute pressure; greater likelihood of payouts being held as risk cover |
| Merchant records become inaccessible | Harder to contest disputes within scheme timeframes | Representment success rates may fall; operational workload rises for the insolvency office-holder |
| Acquirer tightens risk controls | Settlement/payouts may be delayed and reserves may increase | Less available cash for day-to-day operations during an already constrained period |
A key distinction: customer insolvency claims vs card dispute outcomes
When a company is in liquidation, customers (and suppliers) may be “creditors” in the insolvency. GOV.UK describes creditor claims processes for compulsory liquidation in Claim money back from a company in compulsory liquidation.
Card disputes can sit alongside that, but they are not identical:
A chargeback is an issuer/scheme recovery attempt through the payment chain.
A creditor claim is a claim against the insolvent estate, paid (if at all) under insolvency rules and priorities.
In practice, some consumers may pursue card-provider routes because those routes don’t depend on the insolvent estate having assets available.
Scenario-level / Process-level / Outcome-level
| Scenario-level | Process-level | Outcome-level |
|---|---|---|
| Insolvency begins (admin/liquidation) | Control shifts to administrator/liquidator; bank access and systems access can change | Merchant response capacity to disputes may reduce |
| Disputes raised by customers | Issuer assesses eligibility; scheme process may run; evidence requested | Some disputes upheld due to non-response or limited evidence |
| Acquirer risk reassessment | Settlement and payouts reviewed; risk cover may be increased | Reserves rise and/or payout delays extend |
| Insolvency claims route used | Creditors submit claims to insolvency office-holder | Payment depends on assets and insolvency priorities; timing can be lengthy |
How this interacts with bank restrictions and account access
Insolvency can coincide with banking restrictions, or separate compliance restrictions. If a bank account is also restricted, operational disruption can intensify: bills, payroll, and routine payments may be affected, which can indirectly increase cancellations and disputes.
Related reading (distinct scenarios, but often overlapping in real life):
Difference between a frozen and closed business bank account
Direct debits and standing orders when a business account is frozen
Compare Business Bank Accounts
Where a business banks can affect the practical impact of insolvency-era dispute handling – not because it changes card scheme rules, but because it influences operational continuity (access to statements, audit trails, user permissions, support channels, and how quickly routine payment administration can be stabilised).
A neutral overview of UK account options and features is here: Business bank accounts.
Frequently Asked Questions
Yes. Chargeback is initiated by the cardholder through their bank or lender and can proceed even if the merchant has entered insolvency. UK Finance outlines chargeback as a card-scheme process with typical time limits in its chargeback FAQs.
What often changes is the merchant’s ability to engage with the process. Administration or liquidation can reduce access to staff, systems, and records needed to respond within scheme windows.
Not automatically. Disputes depend on scheme rules, evidence, timing, and the nature of the claim. The Financial Ombudsman Service explains that chargeback is only available in certain circumstances and banks typically request supporting evidence before starting a chargeback in its chargeback and section 75 guidance.
However, if the merchant cannot provide evidence or cannot respond in time (a common operational problem during insolvency), outcomes can be less favourable.
Administration is commonly associated with an attempt to rescue or restructure the business, and the administrator controls the business during the process. GOV.UK summarises this in Put your company into administration.
Liquidation is winding up, typically involving selling assets to pay debts, and it is commonly associated with trading stopping. GOV.UK’s overview is in Liquidate your limited company. If fulfilment stops abruptly, “not received/not provided” disputes may rise.
It can happen. Insolvency can increase perceived dispute/refund exposure, and acquiring chains often manage that with risk controls such as payout delays or increased reserves as risk cover.
The effect can look similar to freeze-led controls. For the separate (freeze-driven) explanation of reserve mechanics, see Rolling reserves explained: why they rise during a freeze.
Chargeback is typically described as a card-scheme process rather than a statutory right. The FCA explicitly notes in its consumer refunds guidance that chargeback is not a statutory right and discusses typical timing expectations in its finalised guidance on cancellations and refunds.
That said, it’s widely used and supported by many banks and lenders, and it can be relevant where goods/services are not provided or are misdescribed, subject to scheme rules and the issuer’s assessment.
Time limits vary by scheme and scenario, but UK Finance notes a typical limit of 120 days from purchase or expected delivery in its chargeback FAQs, and Visa’s consumer guidance also references the importance of acting within that kind of window in its chargeback overview.
In insolvency, timing can become more salient because customers may only discover non-delivery or business closure after a delay, and merchants may have reduced capacity to respond quickly.
For eligible credit-card purchases, customers may claim against their credit card provider under section 75-type rights (subject to conditions). MoneyHelper summarises how this works and the typical £100–£30,000 purchase range in its section 75 and chargeback guide.
From the merchant perspective, this can shift the “front-end” of the claim away from the merchant and toward the card provider’s complaint/claims process, although it may still result in recovery actions through the payment chain depending on circumstances.
It can. Restricted banking access can disrupt refunds, customer communications, and routine operations, which can indirectly increase dispute volumes. It can also slow evidence collection (statements, refund logs, dispatch records).
Related operational context is covered in Card refunds when a business account is frozen and Direct debits and standing orders when a business account is frozen.
In liquidation, customers owed money can be creditors of the insolvent estate. GOV.UK explains creditor claiming in compulsory liquidation in its guidance for creditors.
That route does not necessarily “replace” card disputes, because card disputes may be pursued through the card provider and scheme process, while creditor claims are handled within insolvency distribution rules and depend on available assets.
Operationally, two pressures often increase: information pressure (getting the right documents quickly) and cashflow pressure (payout controls and reversals). Card dispute handling can become more central because evidence quality and response timeliness influence outcomes.
If insolvency coincides with bank restrictions, it can add complexity. For general differences between restriction states, see Difference between a frozen and closed business bank account, and for chargeback mechanics during banking restriction scenarios, see Chargebacks when a business account is frozen.
The constraint most businesses underestimate is dispute latency: card disputes can arrive well after the underlying sale, and insolvency events make the “response machinery” weaker right when it needs to be strongest.
Administration and liquidation don’t switch disputes off; they often change who controls the records, whether teams can respond, and how reliably refunds can be processed.
From the payment chain’s perspective, insolvency increases the chance that future reversals cannot be recovered smoothly.
That’s why risk cover mechanisms (like reserves and payout delays) tend to become more visible around insolvency dates, even if card acceptance itself continues for a period.