Can you reuse a limited company name after liquidation?

Can you keep a limited company name after liquidation?

It’s easy to see why you might want to retain your company name, even after liquidation if you have closed a limited company with debts. Maybe it was your first business and you want to try again, or you put a lot of effort into branding and don’t want to lose the impact of that.

Unfortunately, Section 216 of the Insolvency Act 1986, prohibits the use of limited company names post-liquidation. This is partly to protect the financial interests of creditors and members of the public. This ruling applies not only to the registered company name at the time of liquidation, but also to any company name used in the 12-month period leading up to liquidation.

What is the time limit for the rules regarding reuse of company names?

The rules regarding the reuse of company names following liquidation applies to any director or shadow director in office at the company in the 12-month period leading up to the company's entry to liquidation. It is important to note that it also covers ‘similar’ names which might mislead the public into thinking it is the same, or an associated, company.

Directors or shadow directors must not use or be involved in the formation of any company with the prohibited name, or any similar name, for a period of five years from the date of liquidation.

 

 

 

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Are there any exceptions to the reuse of company name rules?

There are certain exceptions which allow a new company to use the same name as a company which has been liquidated in the last five years:

• Purchase the company and its name during the insolvency process
  You have a short timescale in which to purchase the entire, or a substantial part of the company, including its debt, from the liquidator. This purchase can include the company name and the rights to use it. All company creditors must be informed, and a notice placed in the Gazette within 28 days of purchase.
• Apply to court to retain the name
  You can apply to the court within seven days of the date of liquidation to keep the name. You can use it for up to six weeks, or until a decision has been made by the court. Bear in mind, though, that they might not rule in your favour.
• Groups of companies
  Some companies have very similar names if they are part of a group, and an exception exists to allow for this and prevent associated businesses being adversely affected by one of their group.

“Called for help with closing non-trading companies and Chelsea advised me on what to do and instead of taking advantage as others would by taking on the case and charging loads. She gave me a solution that would cost £20. Very pleased with the service and thankful for Chelsea’s advice.”

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Chelsea Williams
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What are the penalties for contravening reuse of company name rules following liquidation?

There are severe penalties if you reuse a company name following liquidation without the required permissions being granted. These include fines and even imprisonment. The courts take a dim view of anyone suspected of trying to mislead the public or creditors, and you could find yourself becoming personally liable for company debt from the time when you began reusing the prohibited name.

These penalties can also be applied to anyone acting on the instructions of someone who has contravened Section 216, if they are aware of what is happening. These rules are in place to prevent unscrupulous directors from evading their responsibilities to creditors by simply setting up a new company following liquidation of their old business.

If you’re in any doubt as to whether or not these rules apply to you following the liquidation of your insolvent company, Real Business Rescue is here to help. We offer same-day consultations to discuss your situation, and the options available. With nationwide offices, you’re never far away from expert and confidential advice.