Phoenix companies and reusing a business name

Most directors can form a new company after a liquidation, and buying back the business or its assets from the liquidator at proper value is a legitimate way to save a viable trade and jobs.

For five years a former director generally cannot be involved in a new company that uses the same or a similar name to the liquidated one, unless one of three statutory exceptions applies, such as following the correct court or creditor notice procedure. Buying the business back must be at fair value through the liquidation. If the business is instead sold through administration before it closes, that is a pre-pack administration, which has its own rules for connected buyers. Done properly and transparently, a phoenix is fine, but it needs to be handled with a Licensed Insolvency Practitioner.

Part 22 of the Insolvency (England and Wales) Rules 2016 sets out three cases where a former director can use the old name without breaking section 216:

1. The business is bought from the office-holder (rule 22.4). The new company acquires the whole, or substantially the whole, of the old business under arrangements made by the liquidator, or before the liquidation by an administrator, administrative receiver or supervisor of a CVA. Before acting under the name, the person must give notice to every creditor of the old company whose name and address they know or can reasonably find out, and publish the notice in The Gazette, no later than 28 days after the purchase completes. The notice must give the date the old company went into liquidation and say that the person was a director of it in the 12 months before. This route is not open to anyone who has already acted in breach of section 216.
2. A prompt application to the court (rule 22.6). If the person applies to the court for permission within seven business days of the liquidation date, they can use the name from that date until the court decides, or for six weeks, whichever comes first. The Secretary of State must be given at least 14 days' notice of the application (rule 22.2), and the court can ask the liquidator for a report on how the company became insolvent and the applicant's part in it (rule 22.3).
3. The name was already in use (rule 22.7). No permission is needed where the other company has been known by the name for the whole of the 12 months before the liquidation and was not dormant at any time in those 12 months. This case applies to companies only.

Outside these three cases the only route is permission from the court, which is not given retrospectively. Our prohibited name checker works out the dates for your case. Older guides still cite rules 4.228 to 4.230 of the Insolvency Rules 1986 and a seven-day court deadline: those rules were replaced by Part 22 on 6 April 2017, and the deadline is now seven business days.