7. Ms. C has recently purchased some coupons (prepaid coupons) from a beauty salon but that salon suddenly closes down. Can she claim her money back and by what means?

7. Ms. C has recently purchased some coupons (prepaid coupons) from a beauty salon but that salon suddenly closes down. Can she claim her money back and by what means?

There is little safeguard on consumer interest in prepayment scheme or coupons. In some cases, a company closes down some time after it has gone into liquidation. In some other cases, a company's business comes to an end without prior notice to the outside world. The reasons for a company's demise can be just as diverse: there may be financial difficulties, fierce competition, retirement, fraud, personal reasons and so forth. Consumers who find themselves in such an unfortunate situation may seek legal advice from lawyers, or contact the Consumer Council and the Police.

If a winding-up order has been granted against the company (in case it is a limited company), then the aggrieved consumers are legally entitled to recover their payment for the tickets. However, the consumers will only be treated as ordinary or unsecured creditors on claiming their loss. In reality, this means that the consumers will usually recover no more than a small proportion of the debt.

In order to be eligible as one of the creditors in a winding-up action, Ms. C has to prove that the company owes her money by completing a Proof of Debt Form (Form 63A). She must also submit the form to the provisional liquidator or liquidator, together with documentary evidence, if any, after the winding-up order has been made against the company. For more details, please refer to the topic of Bankruptcy and Winding-up.

If the company closes down suddenly without leaving any assets, the prospect of consumers (holding pre-paid coupons or vouchers) recovering their loss is usually very slim.