The short answer is yes, however there are restrictions and potential problems that you need to be aware of if your Company is experiencing financial difficulties and this is of concern to you.

The legal position and practical steps are covered below.

The Rules on Reusing a Company Name

Unlike Being a Director Again where there is no automatic restriction, there is a restriction on the reuse of a Company Name.

To give the technical position, Section 216 of the Insolvency Act states that any person who acted as a Director or shadow director of a Company in the 12 months prior to it entering into insolvent liquidation cannot then be a Director of another Company with the same name or a name so similar as to imply association for a period of 5 years. This includes any trading styles by which the insolvent Company was known.

However, there are 3 exemptions under which a person who would be restricted can reuse the name or a similar name.

The 3 Exemptions Under which a Company Name can be Reused

The 3 exemptions under which a Company name can be reused are:

1. Where the new Company has acquired the business of the insolvent Company from the Liquidator, and the restricted person sends notice to all creditors of the insolvent company that they intend to act as a director of the new company and also places the notice in the London Gazette.
2. Where the restricted person applies to Court for permission to act as a director of the new Company and the Court grants the said permission.

Summary of the Rules on Reusing a Company Name:

• There is an automatic restriction on reusing a Company name.
• The restriction last for 5 years from the date of Liquidation.
• It applies to all Directors in office in the 12 months prior to Liquidation.
• There are 3 exemptions under which a restricted person can reuse a Company name.
• There are severe penalties for non-compliance so it is important to get specialist advice.

3. Where the person has been a director of another trading Company that would have a prohibited name for a period of more than 12 months prior to the liquidation of the insolvent Company.

The above list provides an overview but you should note that formal compliance with any of the 3 exemptions requires very specific circumstances to have been met or very specific notices to have been issued, all within a fixed timeframe. Because of this, it is extremely important that you get good quality advice from a Licensed Insolvency Practitioner if you think you are likely to be subject to a restriction on the reuse of a Company name.

What are the consequences of reusing a Company name if the restriction applies?

If you are think you are likely to be subject to a restriction and do not comply exactly with one of the 3 exemptions, the consequences can be serious. These include:

• Civil – joint and several liability for the debts of the new Company. This means that you and anyone else subject to a restriction on reuse of the Company name could be personally liable for the debts of the new Company.
• Criminal – you could be subject to a fine or prison term should The Insolvency Service take the matter to Court.
• Disqualification – breaches of the restriction on reuse of a Company name will be taken into account by The Insolvency Service when they are deciding whether to take any disqualification action.

How We Help

If you are looking to place your Company into a formal insolvency process it is important to make sure that you get the right advice. This is particularly true if your Company is experiencing financial difficulties as you are likely to be under pressure from creditors and may be beginning to suffer with the stress of the situation. In these circumstances, finding supportive and well structured advice as soon as possible ensures that you have the maximum number of options available and can also go some way to alleviating some of the pressure you are under.

At The Insolvency Helpdesk, we aim to provide you with online access to the information you need to understand your duties as a Director and the potential pitfalls to be aware of. You can then call us for advice specific to your business circumstances in the knowledge that you will better understand these options and the advice given. We operate throughout the UK and all advice is provided by Licensed Insolvency Practitioners with years of practical experience.

Whatever your situation, getting high quality professional advice as soon as possible will give you the knowledge and support needed to help you meet your statutory duties as a Director. We will always work with you to help you achieve the best outcome you can in the most affordable way possible so please call us free on 0800 066 3122