June 6, 2023
By Kate Heaney
If that company ends up going into liquidation, a director can’t really be blamed for wanting to carry on the good name of their company and re-using it as the trading name of a new company.
However, the law has measures in place to restrict directors of a company from re-using a liquidated company’s name and/or trading style in order to prevent directors from misleading their creditors from hiding the fact that their company has gone into liquidation. The legislation states that directors who re-use company names in this way can face civil and criminal sanction and become personally liable for the debts of the new company. Consequences can be disastrous for the director as shown in a recent case, where a director was ordered to pay all the debts of his liquidated company which added up to nearly £1.13million. A hefty price to pay. In this case, the director re-used a liquidated company’s name without knowing he was breaking the law.
Our Insolvency Team set out some key considerations for directors when dealing with the re-use of company names:
If looking to re-use a company name after liquidation, making sure that you know the risks is vital. If you need any help or advice in navigating your way around company liquidation, please contact Mark Rostron on firstname.lastname@example.org / 02920 829 129 or Kate Heaney on email@example.com / 02920 829 121 for a free initial chat to see how we can help you.
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