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Can I re-start my business using a Creditor’s Voluntary Liquidation?


Liquidation and re-start is achievable using a Creditors’ Voluntary Liquidation. It can be done within the law quickly and smoothly.

 

When a company is placed into liquidation all its contracts and relationships end. This doesn’t mean that the business that operates within the shell of the company can’t be uplifted and placed into a new company taking the good bits’ forwards and starting afresh.

 

Are there any restrictions on re-starting the business of a liquidated company?

 

There is no automatic restriction on a Director of an insolvent company being a Director of another company meaning that you can start a new limited company and become a Director of that company.

 

However, if you want to start a new company using the same or similar name as the liquidated company, there are certain restrictions.

 

The limitations on re-use of a company name

 

As a Director of a limited company which has been placed into insolvent liquidation, you are restricted from using the same name or a name so similar to suggest an association under Section 216 of the Insolvency Act 1986. This applies to the company name and any associated trading names or styles. There are various penalties for not complying with the legislation.

 

There are few exceptions to S.216 and one of those would be to purchase the whole or substantially the whole of the assets of the company from the liquidator. You would then be required to write to all of the creditors of the existing company and place an advert in the London Gazette to advise that you are to become a Director of a company with a same or similar name.

 

Transfer of Goodwill and Assets

 

You should not transfer the assets of the insolvent company into a new limited company without making or intending to make payment for them. An independent valuation will need to be obtained to ensure that you are paying a fair price for the assets to avoid criticism from the creditors of the insolvent company.

 

The existing company will then be liquidated and the liabilities will remain as a creditor of the company in the liquidation except those for which Directors have given a personal guarantee.

 

This is only a brief summary, for more information or advice contact the Timothy James Partnership.


Added: 24 May 2017 11:50


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The Timothy James Partnership

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Insolvency Practitioners Association
About Us


We are an independent firm of specialist Licensed Insolvency Practitioners located in Bromsgrove, Worcestershire.

At The Timothy James Partnership, we work very closely with local businesses and professionals, providing guidance on formal insolvency procedures and advice on restructuring businesses.

We recognise that at times, companies find themselves in difficult financial circumstances and our aim is to provide practical solutions in these situations.