Is a company name always prohibited after liquidation?

brand logo notepad

David Kirk outlines what you can and can’t do with an insolvent company name.

When a company enters insolvent liquidation, a director or shadow director (or someone involved in the management of the company) can’t set up another company and use the same or a similar name for a period of five years from the date of liquidation. That also includes a name it traded with.

A breach of this rule is a criminal offence and is punishable by a fine, imprisonment, or both. As a company liquidator, if I discover this has happened, I have a duty to report this to the Insolvency Service, and they can prosecute. The director or shadow director may also be struck-off for up to 15 years.

The other consequences are that any new company created with the same or similar name does not have limited liability. The director, shadow director or manager of the new company is personally liable for any new company debts.

However, there are some useful exceptions to these rules:

  • If the old company is liquidated and the assets are sold by a liquidator to the new company. This exception requires a formal notice be sent to all creditors of the old company and advertised in The London Gazette within 28 days of liquidation. Note that the director can’t value and sell the assets (even at market value) to themselves pre-liquidation – they must be sold by the liquidator, who is a licensed insolvency practitioner.
  • Where the new company had already been established with the same or similar name and has traded for at least 12 months prior to the old company being liquidated. The common situation here is a group of companies with similar names.
  • When permission to reuse the name has been granted by the court. An application for such permission must be made within seven days of the date of liquidation.

Any sensible company director will realise that these rules need to be respected very carefully, as the consequences of making a mistake are serious.

I always recommend directors seek legal advice where they intend to reuse the same or similar name, to ensure it has been dealt with properly.

About the author

David Kirk is a chartered accountant and licensed insolvency practitioner based in the south west. Follow @kirksinsolvency or visit the Kirks website.