The relevant provisions are sections 216 and 217 of the Insolvency Act 1986 (IA 1986).
These provisions are aimed at preventing phoenix companies from causing a disadvantage to creditors by creating more transparency surrounding the re-use of company names.
A phoenix company may typically be where a director or directors trade a successive company with a similar name, taking the valuable parts of the company in liquidation, 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. This practice (known as phoenixing) is therefore met with distrust by creditors.
A person who was a director or shadow director of a company which goes into an insolvent liquidation (defined by IA 1986, s 216(7)) at any time in the 12 months immediately prior to liquidation is caught.
It also applies to a person who is involved in the management of the company and acts or is willing to act on instructions
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