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Rising from the ashes – the reuse of a company’s name or trading style

Under the provisions of <strong>sections 216 and 217 of the Insolvency Act</strong>, if you have been a director or shadow director of a company at some time in the year prior to it going into liquidation, you are not allowed to be a director for the 5 years after the commencement of liquidation, or even be involved in the management of another company with a similar name or trading style.....

If you breach this law, you are committing a criminal offence and will be liable for all the debts of the other company and may be disqualified from acting as a director for up to 15 years.

There are some exceptions to the general rule:

  1. If the company purchases the business including goodwill from the liquidator, and notice in a prescribed form is given within 28 days to the liquidated company's creditors
  2. If you apply to the court and the court gives you permission
  3. If the company with a similar name as the one going into liquidation, has had a similar name or trading style and has been trading for the full 12 months prior to the liquidation.

This is a complicated area of law and, as can be seen, the penalties for falling foul can be severe. It is therefore always best to take specialist advice if in any doubt.

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