Q&As

Does sending a notice to creditors under Insolvency (England and Wales) Rules 2016, SI 2016/1024, r 22.4 only allow for the director to use a prohibited name in respect of the successor company which has bought the business of the liquidated company, or can the notice also provide for the use of a prohibited name by other associated companies which haven't bought the business but which the individual is a director of and which uses the prohibited name?

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Produced in partnership with Helen Kavanagh
Published on LexisPSL on 05/04/2019

The following Restructuring & Insolvency Q&A produced in partnership with Helen Kavanagh provides comprehensive and up to date legal information covering:

  • Does sending a notice to creditors under Insolvency (England and Wales) Rules 2016, SI 2016/1024, r 22.4 only allow for the director to use a prohibited name in respect of the successor company which has bought the business of the liquidated company, or can the notice also provide for the use of a prohibited name by other associated companies which haven't bought the business but which the individual is a director of and which uses the prohibited name?

Does sending a notice to creditors under Insolvency (England and Wales) Rules 2016, SI 2016/1024, r 22.4 only allow for the director to use a prohibited name in respect of the successor company which has bought the business of the liquidated company, or can the notice also provide for the use of a prohibited name by other associated companies which haven't bought the business but which the individual is a director of and which uses the prohibited name?

This Q&A focuses on sales by liquidation. Sales by other office-holders when company is not in liquidation are not considered.

A director of a company that goes into liquidation cannot use the name of that company in liquidation in a new business for a period of five years, or they risk criminal and/or civil penalties under section 216 of the Insolvency Act 1986 (IA 1986). For further information, see Practice Note: Prohibited names under section 216 of the Insolvency Act 1986.

IA 1986, s 216 was designed to counteract the 'phoenix' phenomenon, where directors put their insolvent company into liquidation, set up a new company using the same name, and then seemingly carried on the same business with no material change, leaving behind its creditors. The re-use of the name is seen by many as a way of deceiving creditors into thinking they are dealing with the same company,

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