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Once you liquidate your limited company, you cannot reuse the name or similar names for up to five years post-liquidation, unless you buy the business during the insolvency process, seek permission from the court, or if the liquidated company was part of a group of companies. If you fail to comply, you could face a penalty.
It’s easy to see why you might want to retain your company name, even after liquidation if you have closed a limited company with debts. Maybe it was your first business and you want to try again, or you put a lot of effort into branding and don’t want to lose the impact of that.
Unfortunately, Section 216 of the Insolvency Act 1986, prohibits the use of limited company names post-liquidation. This is partly to protect the financial interests of creditors and members of the public, and applies to any company name used in the 12-month period leading up to liquidation.
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Start The 60 Second TestThe rule is applicable to any director or shadow director in office at the company in the same 12-month period. It is important to note that it also covers ‘similar’ names which might mislead the public into thinking it is the same, or an associated, company.
Directors or shadow directors must not use or be involved in the formation of any company with the prohibited name, or any similar name, for a period of five years from the date of liquidation.
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Certain exceptions exist to this ruling:
There are severe penalties if you go against these rules, including fines and imprisonment. The courts take a dim view of anyone suspected of trying to mislead the public or creditors, and you may also become personally responsible for company debt from the time when you took over the name.
These penalties could also be applied to anyone acting on the instructions of someone who has contravened Section 216, if they are aware of what is happening. These rules are in place to prevent unscrupulous directors from evading their responsibilities to creditors by simply setting up a new company following liquidation of their old business.
If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need.
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If you’re in any doubt as to whether or not these rules apply to you, Real Business Rescue is here to help. We offer same-day consultations to discuss your situation, and the options available. With nationwide offices, you’re never far away from expert and confidential advice.
Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.
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