Use Of Company Name After Liquidation?
The use of company name after Liquidation remains complex.
However, rules exist which constrain the use moving forward. Therefore, they require careful consideration.
When is the name prohibited from use (Section 216)?
Thus the use of the same name would be prohibited therefore for five years if associated with the company just liquidated, for 12 months before the Meeting of Creditors. Therefor legal advice, however, needed, to clarify, if you feel you have a case.
Use of a ‘similar’ name, How is it then determined?
Generally, by an independent person, who associates or connects to the new company, with the old company using their trading names, therefore considered similar.
Reusing a prohibited company name, what’re the consequences?
Acting in contradiction of Section 216 of the 1986 Insolvency Act 1 can then incur imprisonment, usually with a fine, or both. Further, directors of the new company, operating under a prohibited name, subsequently may then lose the protection of limited liability.
Exceptions which may then allow you to reuse a company name:
A Pre-pack liquidation.
A person or company may then buy the business and trading name. A Pre-Pack completed by the Licensed Insolvency Practitioner appointed. Notices require sending to all creditors as per the statement of affairs of the insolvent company. Done within 28 days of the date of purchase and advertised in the London Gazette.
Apply to the court for ‘leave.’
The directors of the new company then apply to the court for permission to reuse the name of the previous insolvent company. The application must be within seven days from the date of the Liquidation. However, leave should be granted by the court no later than six weeks from that date. I
Name already used by another company.
Applies to companies with the similar or same trading name as the old insolvent company. However, therefore stopping the Liquidation of an insolvent company member of a group affecting others in the group losing their right to use their names. Therefore, the prohibited name needs using by a company for 12 months before the old liquidation date.
During the 12 months, the relevant companies must have traded continuously without a break.
In summary, Reuse of a limited company name after Liquidation is not simple. Therefore in the circumstances, however, it remains possible to reuse a company name, though not always clear as to when you may do so. Therefore, seek professional advice. Finally,It can have severe legal implications if found to be in breach of Section 216.