Use Of Company Name After Liquidation?
Use of company name after liquidation remains complex.
However, rules exist, which constrain the use moving forward. Therefore, they require careful consideration.
When is the name prohibited from use (Section 216)?
Thus, using the same name would be prohibited, therefore, for five years, if associated with the company recently liquidated, for 12 months before the Meeting of Creditors. Therefore, legal advice is needed to clarify if you think you have a case.
Use of a “similar” name, how is it then determined?
Generally, by an independent person, who associates or connects to the new company, with the former company using their trading names, therefore considered similar.
Reusing a prohibited company name, what’re the consequences?
Acting in contradiction of Section 216 of the 1986 Insolvency Act 1 can then incur imprisonment, usually with a fine, or both. Further, directors of the new company, operating under a prohibited name, may then lose the protection of limited liability.
Can you ignore a section 216 ban?
Ignoring a ban may involve you:-
- Facing prosecution along with a fine and possible imprisonment;
- Could be disqualified as a company director up to 15 years;
- Being personally liable for the debts of the new company.
Exceptions which may then allow you to reuse a company name:
A Pre-pack liquidation.
A person or company may then buy the business and trading name. A pre-pack liquidation completed by the Licensed Insolvency Practitioner appointed. Notices require sending to all creditors as per the statement of affairs of the insolvent company. Done within 28 days of the date of purchase, and advertised in the London Gazette.
Apply to the court for ‘leave.’
The directors of the new company then apply to the court for permission to reuse the name of the previous insolvent company. The application must be within seven days from the date of the liquidation. However, leave should be granted by the court no later than six weeks from that date.
Name already used by another company.
Applies to companies with the same or same trading name as the original insolvent company. However, therefore stopping the Liquidation of an insolvent company member of a group, affecting others in the group losing their permission to use their names. Consequently, the prohibited name must be used by a company for 12 months before the previous liquidation date.
During the 12 months, the relevant companies must have traded continuously without a break.
Use Of Company Name After Liquidation – Summary
In summary, using a limited company name after liquidation is not simple. Therefore, in the circumstances, however, it remains possible to reuse a company name, though not always clear when you may do so. Therefore, seek professional advice.
Finally, it can have severe legal implications if found to be in breach of Section 216.