Phoenix Companies - re-using the name of an insolvent company
Question: I am the director of an insolvent company and want to use a similar name in my new business. Can it be done and what are the pitfalls?
Answer: Yes it can be done. The main pitfalls are the penalties if you get the details wrong - imprisonment or a fine, or both, and personal liability for the debts of your new company!
Q: So how can I use the name I want without risk?
- you buy the business from the insolvency practitioner appointed to the insolvent company and send certain information to its creditors;
- you apply to court for permission to use the new name; or
- the new company has been known by the new name for 12 months before the old company went into formal insolvency.
Q: So as long as I give notice or get permission there will be no problem?
A: As you might expect, the law is not entirely straightforward:
- the points above apply from 6 August 2007 (until then problems with the wording of the law and a Court of Appeal decision made it much more difficult - our technical posts explain this here);
- there are strict time limits for giving notice and making court applications; and
- making a court application costs money and the court may say no!
Q: So what should I do?
A: This is a tricky and specialised area where you should take advice from an independent insolvency practitioner or a specialist insolvency lawyer.
Date: 23rd July, 2007
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