Use of Prohibited Names
If your company enters into an insolvency process it may be possible to buy the assets/business of the old company and start up a new company using the same, or a similar name. However directors need to be aware of the prohibited name provision under section 216 of the Insolvency Act 1986.
If you a director of a company that has entered into liquidation/administration and you plan to set up a new company and act as a director you must take advice in respect of re-using the name of the old company or any name which is similar to it. The consequences of not adhering to the statutory framework for this are extremely serious. Directors of the new company could be held personally liable for the debts of the new company using the prohibited name. A breach of section 216 is also a criminal offence.
Take early advice on issues which surround re use of a company name. There are specific procedures in place which can be followed to ensure directors do not fall foul of section 216. Obtaining expert advice is paramount in order to ensure that the strict time limits and procedures can be met.
We have considerable experience in guiding directors through the complexities concerning prohibited names.