If a business that you have invested in fails either the business or Crowdcube will contact you to notify you of this.
Generally, when a company fails they will appoint an insolvency practitioner to manage the administration or liquidation of the company (depending on the applicable insolvency route). In this instance, it is the duty of the Insolvency Practitioner to investigate the conduct of directors and make sure that their actions leading up to the insolvency were in the best interest of shareholders.
Shareholders rank below creditors (e.g. HMRC and lenders) when proceeds are being distributed.
There are some instances where a company may just choose to wind up and not appoint an insolvency practitioner. Generally this is when there are no assets to realise and no creditors owed money. In this instance, as there is no insolvency practitioner to investigate the conduct of directors, we will make sure to have a look into it to establish if there is any misconduct worth reporting to the relevant authorities
Investing in startups and early stage businesses involves risks including illiquidity, lack of dividends, loss of investment and dilution. Investors should therefore implement a diversification strategy when building an investment portfolio. Diversification involves spreading your money across multiple investments and, as an investor, will give you greater peace of mind that your investments will be sustained in adverse market conditions, and that losses will be cushioned. However, it will not lessen all types of risk.
Claiming loss relief. You can find out more here.