Phoenix companies and reusing a business name
A phoenix company is a new company that carries on the business of one that has gone into insolvent liquidation, often run by the same director. Doing this is legal in principle, but the strict rules are about the name: under section 216 of the Insolvency Act 1986, reusing the old name without a statutory exception is a criminal offence and can bring personal liability. Insolvency Act 1986, s216
- Is it legal?
- Yes, in principle; a new company after liquidation is allowed
- The name rule
- Section 216 restricts reusing the same or similar name for 5 years
- Exceptions
- Three statutory routes, including the correct notice procedure
- Breach
- A criminal offence with possible personal liability
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Starting again is allowed
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.
Do it properly, especially the name
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.
Where to go from here
- If you decide to speak to a Licensed Insolvency Practitioner, choose your own: our practitioner directory lists every practitioner on the official Insolvency Service register, and how to choose an insolvency practitioner explains what to ask. Always confirm their entry on the official register before you instruct anyone.
Common questions
Can I use the same company name after liquidation?
Generally not for five years, unless you follow one of the three statutory exceptions under section 216, such as giving the correct notice. Breaching the rule is a criminal offence, so take advice first.
How do I check whether section 216 applies to me?
Five things must all be true: the old company went into insolvent liquidation, you were a director or acted as one in the 12 months before, the new name is the same or similar, you are involved in running the new business, and you are within five years of the liquidation. Our prohibited name checker walks through each test, the three exceptions and your deadlines.