Can I reuse my company name after liquidation?
Reusing a company name after liquidation is possible, but it depends on the type of liquidation and restrictions from The Insolvency Act. If your company was solvent and closed through a Members’ Voluntary Liquidation (MVL), you can usually reuse the name without restriction. Following an insolvent liquidation, such as a Creditors’ Voluntary Liquidation (CVL) or compulsory liquidation, it’s still possible to reuse the company name, provided the legal conditions under the Insolvency Act are met.
The reuse of a company name can be a complicated issue. We can provide you with free, confidential advice on this issue and can advise on your unique circumstances.
When can’t you reuse a company name after liquidation?
For the same name to be considered as prohibited, it must have been associated with the insolvent company for at least 12 months prior to liquidation. If you have liquidated a company, you cannot carry out any of the following for five years after the liquidation of said company:
- Act as director of a company with a prohibited name
You cannot hold a directorship of a company that trades under a name that has been prohibited by Section 216. - Promoting a prohibited company name
You cannot be involved in the promotion, formation, or management of a company with a prohibited name. - Continuing the company name
You cannot be involved in the carrying on of a business which has a prohibited name.
What are the potential consequences of reusing a prohibited company name?
If you act in contradiction of Section 216 of the Insolvency Act and reuse a company name after liquidation without the required permissions, you could face penalties, including fines, director disqualification, imprisonment and the loss of limited liability.
What are the exceptions that may allow you to reuse a company name?
Certain exceptions can allow a new company to use the same name as a previous company that has been liquidated within the last five years.
- Purchase the business’s trading name
During the liquidation of an insolvent company, in some circumstances, you have the option of purchasing the entirety or part of the business of the company that is being liquidated under arrangements made by the insolvency practitioner. This purchase can also include the trading name and the right to use it. Notices must be sent to all creditors of the insolvent company within 28 days of the date of acquisition and it must also be published in the London Gazette. - Apply to court
You can apply to the courts within seven days of the date of the liquidation of your company to keep its name. You can then use it for up to six weeks or until a court decision is made. However, in this period they may decide to not rule in your favour. - Name already in use by another company/group of companies
Some companies are formed in groups and can have the same or a similar name. If one of these companies enters liquidation, an exception can be made to retain the liquidated company’s trading name so as not to affect the related companies. However, relevant criteria must be met:- The prohibited name must have been used by a company for the period of at least 12 months prior, ending the day before the liquidation of the insolvent company.
- During those 12 months, the relevant companies must have traded continuously and not been dormant for any period.
How our services can help you
If your company is facing financial difficulty and you are considering the liquidation of your company, we can help you understand the processes available and the reuse of a company name post-liquidation.
- Close your company down via a Creditors Voluntary Liquidation (CVL)
A CVL is a liquidation procedure for companies that are insolvent. The process will formally close and liquidate your company, ceasing its trading operations, realising any assets, and removing the threat of creditor legal action. If your company has employees, they can claim for redundancy and other statutory entitlements through the government’s Redundancy Payment Service (RPS). The process is final and irreversible. Once completed, your company’s unsecured debt will be written off and the company is dissolved, allowing you, the director, to move on.
- Close your company down and start again via a pre-pack liquidation
A pre-pack liquidation is a type of CVL where the sale of your company’s assets is arranged before liquidation, allowing business operations to continue seamlessly under the purchasing company. The company name may be reused, and employees can transfer under TUPE. Contracts and essential agreements can also be included as part of a sale, ensuring minimal disruption to your business operations. This process eliminates the unsecured debts of your previous company, providing a fresh start free from previous unsecured liabilities.
How to get in touch with us: The next steps
- Speak with our initial advisers
Make contact with our team, via phone, filling in a form, or online chat. We will assess your circumstances and, if suitable, arrange a free consultation with a consultant to discuss your company’s situation. - Initial assessment
During the consultation, we will advise if an insolvency procedure is the most appropriate route forward or whether alternative solutions better suit your company’s problems - Formally engage with Wilson Field
If there is an appropriate insolvency solution, we will confirm the necessary steps to start the procedure and will issue you with the relevant documentation for you to formally engage us.
In summary
The reuse of a limited company name after an insolvent liquidation is prohibited under Section 216 of the Insolvency Act. There are exceptions which can be made, but this is dependent on your company’s circumstances. We will be able to advise you on your specific situation and the reuse of a company name.
Case Studies
High End Fashion Retailer
Kelly Burton • Retail • Pre-Pack Administration
A high-end independent fashion retailer, operating from a well-established location found itself experiencing severe financial difficulties, following the closure of all retail stores during the two nationwide lockdowns caused by the Covid 19 pandemic.
The retailer did not have a sizeable online practice when the pandemic forced the closure of its flagship store, and sales ceased overnight.
In addition, the retailer had already committed to deliveries of the next season’s stock, which resulted in large balances falling due to suppliers, whilst the stock remained unsold.
Kelly Burton, director and insolvency practitioner at Wilson Field, said:
“Unfortunately due to the pandemic, all of the retail stores had to shut as the country went into nationwide lockdown. Without a solid online presence, the flagship store had its sales effectively stop overnight.
We were pleased to arrange a pre-arranged sale of the business and its assets, which meant that nobody lost their job.”
The Directors approached Wilson Field to explore the option of a pre-packaged administration. Following an extensive marketing campaign, the business and assets were sold to an associated company, and all jobs were saved.
K2 Technologies Ltd and K2 Thermal Imaging Ltd
Kelly Burton • Service Agency • Administration
Wilson Field has helped secure the sale of two related North East businesses, which developed and manufactured thermal imaging equipment, as a going concern to Cenergem Limited backed by a group of local investors not associated with the current management.
Kelly Burton and Joanne Wright from Sheffield-based insolvency specialists Wilson Field were appointed joint administrators of Darlington-based K2 Technologies Ltd and K2 Thermal Imaging Ltd on 25 July 2016.
The two companies had experienced cash flow problems following to a sharp decline in the demand for their products due to increased global competition in the market over the last 18 months.
The sale, which resulted in six of the current eight jobs being saved, was achieved by Wilson Field, working alongside valuers and asset management consultants Charterfields, who handled a number of inquiries and Mark Wilkinson, insolvency partner at Shulmans Solicitors in Leeds.
Kelly Burton, director and licensed insolvency practitioner at Wilson Field said:
“During the past 12 to 18 months K2 had begun to experience increased competition in the market. Competitors had started to manufacture and sell similar products at a lower price, meaning the company had seen a sharp decline in the demand of products and a resultant shortage of cash flow.
“Our job was to realise a sale of K2 as a going concern to achieve the best return for the company’s creditors. There was significant interest by a number of parties. The resultant sale has also saved six of the eight jobs.”
K2 Thermal Imaging Ltd and its predecessors were involved in the development of three products establishing the company as a lead pioneer in thermal imaging.
The company designed and engineered three main product ranges for extensive use in the marine, firefighting and industrial sectors, allowing operators to enter smoke-filled environments to detect and rescue people with a hands-free application, therefore improving success rates in recovery.
LCP Pattern Book Makers
Kelly Burton • Manufacturing • Pre-Pack Administration
All 63 jobs at an Ilkeston company, which can trace its history back over a hundred years, have been saved following a pre-packaged sale. The original business operated by LCP Pattern Book Makers Ltd, which trades as Lee Colourplan Pattern Book Makers, started life in 1909 in the North of England, moving to Derbyshire in 1970.
Licensed insolvency practitioners Kelly Burton and Lisa Hogg both of Yorkshire-based insolvency specialists Wilson Field were appointed as Joint Administrators on 7th August 2017. The business and assets have been sold for an undisclosed sum to GB Patterns Ltd, a company managed by Gareth Bolsover, a former director of LCP Pattern Book Makers.
Kelly Burton, director and insolvency practitioner at Wilson Field said;
“The company enjoyed profitable trading in recent years but 2017 saw a 10% fall in turnover which created cash flow problems. This resulted in arrears with rent, HMRC and other suppliers.”
“GB Patterns Ltd bought the company with all 63 staff being transferred to the new company under TUPE. As well as saving jobs, the pre-packaged sale has mitigated employee termination claims estimated to total £414,018, resulting in a significantly better return to creditors”.
Kelly further commented;
“It is always good to see long-established businesses survive after facing difficulties. In this case with continued financial support from Regency Factors plc, we were able to work with all other parties to reach an outcome which would be in the best interests of creditors and at the same time preserve the business.”
Gareth Bolsover, owner of GB Patterns said;
“This has been an uncertain and very difficult period for the business but the continued financial support from Regency and advice from the administrators at Wilson Field has made the whole process less stressful. Working closely with them has meant we have been able to keep all 63 staff. The future now looks very positive.”
“With our strong reputation within our niche sector and with the same staff team, we are confident that the company has a viable future and is able to offer our customers the same high quality of products and service.”
The business will continue to trade from premises at Crompton Road, Ilkeston, specialising in the manufacture of fabric, wall/floor covering sample books, swatches, PVCU and cardboard binders, on behalf of manufacturing clients, including Colefax & Fowler and Laura Ashley.
Mark Wilkinson of Shulmans LLP, solicitors of Leeds advised and dealt with legal work with asset sales through Robert McArdle of David Currie & Co
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