When a business shuts down, it can leave employees, contractors, and customers wondering if they’ll ever see the money they’re owed. From unpaid wages to undelivered goods, closures can result in significant financial losses.
You’ll be relieved to know that U.S. law offers protections in many cases. Knowing your rights can help you act quickly and maximize your chances of recovery.
Employees and Unpaid Wages
If a company closes while still owing wages, employees are typically among the first to be paid. Under federal and state labor laws, employers must pay all earned wages, including overtime and accrued vacation, up to the final day of business.
In some cases, workers may also be protected by the WARN Act, which requires larger employers to give 60 days’ notice before mass layoffs or closures. If notice isn’t provided, employees may be entitled to additional compensation.
If you suspect you were unfairly dismissed, see What to Do If You’re Wrongfully Fired.
Customers and Unfulfilled Orders
Customers who paid for products or services they never received may also have rights. If you paid by credit card, you can typically dispute the charge with your card issuer. Some states also have consumer protection laws that enable customers to file claims for refunds.
For prepaid services, like memberships or classes, you may be able to join other customers in a claim against the company’s remaining assets. Acting quickly improves your odds, since creditors are often paid in a specific order during liquidation.
Contractors and Vendors
Independent contractors and vendors who provided goods or services are considered creditors. Unfortunately, they are usually lower on the repayment list compared to employees and secured creditors. Still, filing a formal claim in bankruptcy proceedings or liquidation can help recover at least part of the debt.
Contracts can sometimes strengthen your position. If your agreement included clear payment terms or late fee provisions, you may have more leverage when filing your claim.
Check out Independent Contractor vs. Employee: Know the Difference if you’re unsure about your employment classification.
Government Resources and Legal Options
If you’re struggling to recover money, government agencies may help. State labor departments often handle wage claims, while the Federal Trade Commission or state consumer protection offices can assist customers with these claims. Bankruptcy courts also have established processes for creditors to file claims.
In some cases, consulting a lawyer may be worthwhile, especially if large sums are involved. An attorney can guide you through the filing process and help determine whether litigation is an option worth pursuing.
Act Quickly to Preserve Your Claim
When a company shuts down, time is of the essence. Bankruptcy courts and liquidation processes operate on strict deadlines, and missing a filing date can mean forfeiting your right to collect. As soon as you learn of a closure, gather contracts, receipts, pay stubs, or any documentation proving what you’re owed.
Even if you’re not sure whether you qualify as a creditor, filing a claim is better than waiting. Courts often prioritize claims by category, but submitting paperwork ensures your situation is reviewed. The earlier you act, the stronger your chance of recovering some or all of your money.
See Negotiating a Severance Package: What’s Realistic? for guidance on how to handle compensation fairly
The Bottom Line
When a business closes, it doesn’t always mean your money is gone for good. Employees, customers, and contractors all have specific rights and processes to follow for recovery.
By acting quickly, documenting your claim, and leveraging government or legal resources, you give yourself the best chance of reclaiming what’s owed. While you may not recover every dollar, knowing the system and your rights helps protect you from being left empty-handed.
