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
Crane Hire Business
Kelly Burton • Construction & Engineering • Pre-Pack Administration
The directors of a previously profitable crane hire business approached Wilson Field for advice following a significant downturn in turnover. The drop-off was caused by the nationwide lockdowns following the outbreak of Covid-19.
The business relied upon several large UK-based housebuilders for their income, who were also negatively impacted by the government restrictions.
The Directors attempted to restructure the business to minimise overheads. However, a winding-up petition was issued during this time, and with no funds available to pay the debt due, the Directors approached Wilson Field to explore the option of a pre-packaged administration.
After an extensive marketing period, a sale of the business and assets was achieved to an associated company, and saved all the jobs at the business.
Director and insolvency practitioner Kelly Burton said:
“The business was severely impacted when the country went into lockdown as lots of regular clients, were themselves unable to work and generate income. However, after working with the directors, we arranged a pre-pack administration, which saw the business and assets purchased, with all of the company’s employees keeping their jobs.”
Direct Entry Solutions
Kelly Burton • Transport & Logistics • Pre-Pack Administration
A Middlesex postal service company, whose facilities could handle around 30 tonnes of post a day, has been bought out of administration saving all 25 jobs.
The 13-year-old business, which initially traded as a consultancy service supplying postal services to UK-based wholesale mail companies, has been acquired by an associated company Direct Entry Solutions Worldwide Ltd and will be operated by the existing management team.
Joint administrators Kelly Burton and Lisa Hogg of insolvency and business turnaround specialist Wilson Field were appointed to Direct Entry Solutions on 25 January.
The company had experienced a difficult trading period after diversifying from its core offering to incorporate the physical sorting of post along with returned mail management and various other mail processing services. This resulted in possible enforcement action by creditors including HMRC and the Austrian postal company Osterreichische Post.
The total value of the pre-pack administration deal is undisclosed but it includes the business and the assets of the company based on Stockley Close in West Drayton.
Kelly Burton, director and insolvency practitioner at Wilson Field in Leeds, said;
“The consequences of switching from a consultancy to processing mail involved significant investment and consequential increased ongoing costs.
“The company required a large boost in the staffing levels, a bigger premises in a more suitable location, relevant machinery and equipment for the warehouse operatives, in addition to large injections of cash.
“A number of onerous contracts also caused a pressure on cash flow and a build-up of historical debt.
“Our actions have secured all 25 jobs and brought about a better return to creditors. As the jobs were transferred to Direct Entry Solutions Worldwide, this alone saved over £27,000 in redundancy and wages.
“From what was a difficult situation has emerged a better result for creditors and staff.”
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.
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