Helpful Tips

Can you re-use a company’s name when it has gone into liquidation?

By David Perkins

Well the answer is yes and no!

There is an automatic ban on directors/management re-using a company’s name or a name so similar as to suggest an association with the liquidated company. This applies whether the new business is incorporated or unincorporated.

And the penalties are quite severe – criminal sanctions and personal liability for the debts of the new business.

There are however exceptions. The name can be re-used when notice is given to all creditors/advertised before insolvency proceedings commence and the business, or substantially the whole of it, is purchased from the liquidator. This is usually the most cost-effective route.

Permission of the court can be sought where insolvency proceedings have already commenced but this can prove rather costly.

There is a further exception where the purchasing entity has actively traded, without a break, using the name/similar name for 12 months prior to the vending entity’s insolvency.

We have worked with a number of clients, in conjunction with solicitors, where it has been appropriate for a company to enter liquidation and there has been a desire to purchase the business from the liquidator and re-use the name. Sales are always subject to independent valuations to ensure fair value is obtained for creditors. Please do not hesitate to contact us if you would like to discuss this further.

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