Can you reuse a limited company name after liquidation?

What are the rules for reusing your company name post-liquidation?

After liquidating your limited company, you’re unable to use the same name or similar ones for up to five years after liquidation, unless you acquire the business during insolvency proceedings, obtain court approval, or if the liquidated company was part of a group. Failing to adhere to this rule could result in a penalty.

Is it possible to retain the name of a limited company following liquidation?

It’s understandable why you might wish to keep your company name even after liquidation, especially if you’ve closed a limited company with debts. Perhaps it was your initial venture and you’re considering another attempt, or you’ve invested significantly in branding and wish to maintain that impact.

However, Section 216 of the Insolvency Act 1986 prohibits the use of limited company names after liquidation. This measure is aimed at safeguarding the financial interests of creditors and the public. It applies to any company name used in the 12-month period preceding liquidation.

What is the deadline for this decision?

This regulation applies to any director or shadow director who served during the same 12-month period at the company. It’s crucial to understand that it also extends to ‘similar’ names that could potentially confuse the public into believing it’s the same or an affiliated company.

Directors or shadow directors are prohibited from using or participating in the creation of any company with the restricted name, or any similar name, for a duration of five years from the liquidation date.

Are there any circumstances where the rule does not apply?

There are certain exceptions to this rule:

I. Groups of companies.

Some companies may have closely resembling names, particularly if they belong to the same group. An exception is in place to accommodate this and prevent associated businesses from being negatively impacted by the actions of one within their group.

II. Petition the court to preserve the name.

You have the option to petition the court within seven days of liquidation to retain the name. The name can be used for a maximum of six weeks, or until the court reaches a decision. However, it’s essential to acknowledge that the court may not rule in your favour.

III. Acquire the company and its name through the insolvency proceedings.

You have a limited window to acquire either the entire company or a significant portion of it, including its debts, from the liquidator. This acquisition grants you the company name and the associated usage rights. It’s imperative to notify all company creditors and publish a notice in the Gazette within 28 days of the purchase.

Consequences for violating these regulations

Breaking these regulations carries significant consequences, such as fines and imprisonment. The courts harshly judge anyone suspected of attempting to deceive the public or creditors. Moreover, you could become personally liable for the company’s debts from the moment you adopt the name.

These penalties could extend to individuals following the instructions of someone who breaches Section 216, if they are aware of the situation. These regulations aim to stop dishonest directors from avoiding their obligations to creditors by merely establishing a new company after liquidating their previous business. 

If you’re unsure about whether these regulations apply to you, Vanguard Insolvency is ready to assist. We provide same-day consultations to address your concerns and explore available options. With offices nationwide, expert and confidential guidance is always within reach.