What to do when your software company goes out of business

A developer going quiet and a company going under are different problems, and the second one has rules the first does not.

When a limited company is wound up, its assets stop belonging to the people who worked there and pass into the hands of an insolvency practitioner. That sounds like bad news and it is actually the useful part: there is now a named person with a legal duty to deal with you, which is more than you had when nobody was answering emails.

This is what to do, in order, and most of it is free.

First, work out what has actually happened#

The words matter here because the route differs.

Administration means the company is under the control of an administrator who is trying to rescue it or sell it. It may still be trading. Somebody may still be answering the phone.

Liquidation means it is being wound up and its assets sold to pay creditors. There is a liquidator, and the company is not coming back.

Dissolved means it has been struck off the register and no longer exists. This is the awkward one, because there may be no practitioner at all, and anything that genuinely belonged to the company can pass to the Crown as ownerless property.

You can check which, for nothing, on Companies House. Search the company name, open the filing history, and look for the appointment notice. It will name the practitioner and the firm, which is who you write to.

Second, protect the domain, today#

This is the only part with a clock on it, and it is the same clock whatever the legal situation.

If your domain was registered in the company's account, it renews on a card belonging to a business that has stopped paying its bills. Nobody is going to renew it deliberately. When a domain expires your website and your email stop together, and after the grace period it can be registered by anybody.

Check the expiry date with a free WHOIS lookup and put it in your diary. If it is close, say so in your first line to the practitioner, because a domain about to lapse is the one thing they can lose for you permanently in a matter of weeks.

Third, write to the practitioner#

Short, factual, and specific. They are dealing with a lot of people and the ones who get helped are the ones who are easy to help.

Say who you are, what you paid for, and exactly what you are asking for: the transfer of your domain, access to your hosting, a copy of your source code and database, and the transfer of any third party accounts opened in your name. List them. Attach your invoices.

Ask them to confirm in writing what they will release and when. Keep it as a paper trail rather than a phone conversation.

Two things are worth knowing before you write. Your data is generally yours rather than an asset of the company, and practitioners are used to releasing it. The source code is a harder question, because if the contract never assigned copyright to you then the copyright is an asset of the company, and the practitioner has a duty to realise value from assets. That does not usually stop you getting a working copy of what you are already running, but it is the reason to ask early and in writing rather than assume.

Fourth, check whether you had escrow#

Most businesses do not, and it is worth ninety seconds to find out.

A source code escrow agreement puts a copy of your code with a third party, to be released to you if the supplier fails. If your contract mentions escrow, or names a company like NCC, contact that provider directly. Release conditions almost always include insolvency, which is exactly what has happened.

If you had one and never checked the deposits were current, check now. An escrow account nobody topped up since 2019 releases the 2019 code.

While you wait, do not switch anything off#

Your system is almost certainly still running, and running is good. It costs you nothing and it buys time.

Do not let anybody tidy it up, do not cancel services you do not recognise, and do not migrate anything in a hurry. A monthly bill to a company you have never heard of is often the thing keeping your site online.

If you can reach the hosting yourself, take your own backup now: the files and a database export, held somewhere you control. Not because you expect to be blocked, but because a copy you hold yourself is the only one you can be certain of.

What you are unlikely to get back#

The money. This is the part we would rather say plainly than let you find out slowly.

If you have paid for work that was never delivered, you are an unsecured creditor. You can submit a claim to the practitioner, and you should, because it costs you nothing but an email. Unsecured creditors are near the back of the queue and frequently receive nothing at all.

We are developers rather than solicitors, and for anything involving the claim itself, a solicitor or your accountant is the right call. What we can tell you is that the software usually is recoverable even when the money is not, and those two facts get tangled together at exactly the moment somebody is least able to separate them.

Then get it read#

Once you have a copy of the code and access to somewhere it runs, the position is the ordinary one: somebody reads what you have and writes down what it would take to carry on. That is a small, fixed piece of work and it converts an unknown into a known cost, which is the thing that decides whether a system gets rescued or quietly abandoned.

A system whose supplier has gone under is not a harder technical problem than any other inherited system. It is the same problem with a worse week attached to it.

What we do#

We take these on regularly and the first thing we do is read rather than quote. You get a written description of what you have, what state it is in, and what carrying on would cost, including the case for not spending money with us if starting again would genuinely be cheaper.

Everything is in your name from the first day, so you are never in this position because of us. On the code we keep the copyright and you hold a perpetual licence to use it for your project, change it, and have anybody at all change it. It does not lapse if we stop working together, and it does not depend on us still existing.

That last point is the whole of this article, really. The question to ask any supplier is not whether they will still be here in five years. Nobody knows that. It is what happens to you if they are not.