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Reusing a Company Name Following Liquidation
If a company enters liquidation, the directors are automatically disqualified from acting as directors of another company with the same or a similar name for a period of five years, unless certain exceptions apply.
An application for permission to be a director of a company using a prohibited name under s216 IA can be made at any time in the five years following the date that a company went into insolvent liquidation.
Steps should be taken in relation to reusing a company name prior to a company entering an insolvency process.
JMW has extensive experience advising directors on applying to the court for permission to act, whether directors are in breach of s216 IA 1986, and defending any claims, including criminal proceedings, arising from a breach of s216 IA 1986. We can also provide advice on the options available prior to the insolvency of a company.
How JMW Can Help
The team at JMW regularly advises directors on their duties and options when it comes to reusing a company name. We regularly defend directors in relation to proceedings brought by officeholders or government authorities, such as HMRC or the Insolvency Service.
Our team includes an experienced licensed insolvency practitioner and we regularly work with other professional firms, both large and boutique, so we can tailor the level of service and costs to the client’s needs.
Breaching s216 IA 1986 By Using an Existing Company Name
If you breach s216 of the Insolvency Act 1986, even if the breach is inadvertent, you will have committed a criminal offence and risk a further period of disqualification. You will also become personally liable for any debts the new company incurred during the period of contravention.
A director who sets up a new company (NewCo) under the same or similar name to an existing company that has been liquidated (OldCo), known as a ‘phoenix’ company, may be held responsible for the debts and liabilities of the NewCo, unless an exemption applies.
Directors should seek legal advice before using a prohibited name. If you are concerned that you may be using a prohibited name, or you wish to reuse a company name, you should contact JMW’s expert solicitors for professional legal advice.
Exemptions to Reusing a Company Name
There are three exemptions to the prohibition of reusing a company name:
- If a NewCo has been actively trading using the prohibited name for at least 12 months prior to the liquidation of the OldCo.
- Where the director of a NewCo applies to court within seven business days from the date that the OldCo went into insolvent liquidation for permission to reuse the name of an OldCo. Leave must be granted by the court no later than six weeks from that date for it to be exempt.
- Where a NewCo acquires the business of an OldCo from an insolvency practitioner and the director before using the name:
- Gives notice in the prescribed form to all creditors of the OldCo of their intention to act as a director
- Publishes a notice in the London Gazette within 28 days of the completion of the acquisition
To speak to a solicitor for legal advice and assistance in relation to reusing a company name following liquidation, contact JMW on 0345 872 6666. Alternatively, fill in our online enquiry form and we will get back to you.