An insolvent estate's asset schedule is built from what is visible: bank balances, receivables, stock, fixtures. A category that is easy to miss sits with a third party the business dealt with every day and rarely thought about — its payment service provider, e-money institution or acquirer. When a card-accepting business stops trading, that counterparty is often still holding money that belongs, in principle, to the estate.
What actually gets held
Payment processing agreements routinely give the provider the right to retain a portion of transaction volume, and to withhold settlement outright in defined circumstances. Three patterns account for most of what we see.
- Rolling reserve. A share of each transaction — commonly somewhere between five and fifteen per cent — held as security against future chargebacks, typically for six to eighteen months. For a business with meaningful card turnover before failure, the accumulated reserve can run to a significant sum, and it does not automatically stop accruing the day the business ceases trading.
- Withheld settlements. Payouts for transactions already processed and already owed, frozen at the first sign of financial distress or on termination of the relationship — often before an administrator or liquidator is even appointed.
- Chargeback holds. Amounts reserved against disputes that are pending, anticipated, or simply asserted as a possibility, sometimes well in excess of the business's actual chargeback history.
None of this is necessarily wrongdoing. Reserves and holds exist because the provider carries scheme liability after the merchant relationship ends. The issue for the estate is narrower and more practical: the money is real, it is often larger than the file suggests at first glance, and nobody on the provider's side has an incentive to volunteer it.
Why these claims are usually left on the table
There are three ordinary, defensible reasons an estate does not pursue this asset, and none of them relate to whether the claim is real.
Cross-border friction. The provider and its regulator frequently sit in a different jurisdiction from the estate, operating under their own contractual terms and their own supervisory regime — and with no particular incentive to pay out quickly to an insolvent counterparty that is unlikely to litigate.
Specialist knowledge. Establishing what is held, on what contractual basis, and with what entitlement calls for a working knowledge of payments regulation and settlement mechanics that sits outside the ordinary scope of administering an estate.
No spare time or capital. An estate has other priorities, a fixed budget for professional costs, and no appetite for funding cross-border legal work against a counterparty that may simply not respond. Against that backdrop, a claim that requires upfront investment to even quantify is easy to write off — reasonably, on the facts available at the time.
Assignment or mandate: the practical route
Where an estate does not have the capacity to pursue a claim of this kind directly, the practical alternative is to have someone else pursue it on the estate's behalf, without the estate funding the work. This is typically structured as an assignment or a mandate of the claim — the estate transfers or delegates the right to pursue the specific claim against the payment provider, in exchange for a share of whatever is recovered.
Whether an assignment or a mandate is the right instrument, and whether it needs the sanction of a court, a creditors' committee or another party, depends on the jurisdiction and the specifics of the appointment. That question is answered on the facts of the case, not as a general rule, which is why an initial conversation precedes any paperwork.
Under this structure, the party pursuing the claim funds the work and carries the cross-border complexity; the estate takes no litigation risk and commits no further estate funds. If nothing is recovered, the estate owes nothing beyond the time spent on an initial conversation.
What a first assessment looks like
A first look does not require a full reconstruction of the business's payment history. It starts with what is normally already in the file:
- The merchant services or acquiring agreement, and any schedules covering reserves or security provisions.
- Settlement statements or portal exports showing processed volume and any reserve balance, for as much of the business's trading history as is available.
- Correspondence around termination or offboarding, if the relationship ended before insolvency.
- Any written request the business or its directors made to the provider for release of held funds, and any response received.
Where some of this is missing, that is not unusual and not disqualifying — a good part of a first assessment is establishing what can still be obtained from the provider itself, from the business's accounting records, or from its former directors.
A quick way to tell if it is worth a look
Before committing time to it, a handful of simple signs indicate whether an estate's file is worth a closer look: the business accepted card payments; it had a relationship with a PSP, EMI or acquirer; the contract included a rolling reserve or other security provision; payouts were interrupted before the business ceased trading; or funds simply appear withheld or unaccounted for in the records. If several of these apply, it is worth a closer look — see the full checklist, with what to look for on each point.
Two related pieces go further: how the assignment or mandate works, and where the money sits — which counterparties and regulators are typically involved, and why the cross-border shape of the problem is what makes it hard to pursue alone.
A short, no-obligation conversation is usually enough to say whether a file is worth pursuing at all — see our page for insolvency practitioners for how that conversation is structured, and to arrange one.
This article is for information purposes only and does not constitute legal advice.