Phoenix company rules: reusing a company name after liquidation

What is a phoenix company?

A phoenix company is a new company that takes on the business of an old one after it has gone into liquidation, administration or dissolution, usually with the same directors in charge and often under a similar name.

The Insolvency Service uses two terms. Phoenixism is the same business or the same directors trading through a series of companies that liquidate or dissolve leaving debts unpaid. Abusive phoenixism is doing that repeatedly to evade debts or for fraud, and that is what it sets out to stop.

Companies fail for many reasons that have nothing to do with misconduct, and the law accepts that. You can start again, and can even buy the old business from the insolvency practitioner, if the rules on value, disclosure and names are followed.

Is a phoenix company legal?

A phoenix company is legal when its directors are not bankrupt or disqualified, it acquires anything it takes from the old company properly through the liquidator or administrator, and any reuse of the old name falls within an exception to section 216.

Insolvency Service guidance on GOV.UK says the law allows the owners, directors and employees of insolvent or dissolved companies to set up new companies in a similar business. Any asset you want from the closed company, even one you think is worthless, must be properly transferred through the liquidator or administrator.

What turns a fresh start into abusive phoenixism is how it is done, and what happened before the old company failed. Trading on when you knew, or should have known, that the company could not avoid insolvency can also bring a claim for wrongful trading, which can leave a director personally liable to contribute to the company's assets.

Can a director reuse a company name after liquidation?

A director can only reuse a liquidated company's name, or a similar one, within five years if an exception applies or the court agrees, because section 216 of the Insolvency Act 1986 makes it a prohibited name.

It covers anyone who was a director or shadow director at any time in the 12 months before the company went into insolvent liquidation, including, in the Insolvency Service's view, people who acted as directors without being appointed. It lasts five years from the start of the liquidation and applies even where nobody did anything wrong.

The trigger is an insolvent liquidation, meaning a compulsory liquidation or creditors' voluntary liquidation that began when the company's assets were not enough to pay its debts and the costs of the winding up. It does not apply to a members' voluntary liquidation of a solvent company, and an administration does not trigger it unless the company later moves into liquidation. For those five years, a person it covers must not do any of the following without an exception or the court's permission.

• Be a director of any other company known by a prohibited name.
• Take part in running such a company, directly or indirectly, including helping to promote or form it, whatever your job title.
• Carry on an unincorporated business, such as a sole trade or partnership, under a prohibited name.

What counts as a prohibited name under section 216?

A prohibited name under section 216 is any name the liquidated company used in its last 12 months, including its registered name and trading names, plus any name so similar that it suggests an association with that company.

Trading names can include registered trade marks and brand names, whoever owns them, and a company known by your own name makes that name prohibited. Similarity is often hard to call, so the Insolvency Service gives examples of what the courts may treat as prohibited and recommends advice in any case of doubt.

If the law requires your own name to be shown as the owner of a business, you must still show it. If you are unsure whether a name is caught, take advice before you use it.

What are the exceptions that let a director reuse a prohibited name?

The Insolvency (England and Wales) Rules 2016 set out three exceptions that let a former director reuse a prohibited name without breaking section 216, and a director can also ask the court for permission at any time during the five-year ban.

They are in Part 22 of the Rules, and Scotland has similar rules in Part 12 of the Insolvency (Scotland) (Receivership and Winding up) Rules 2018. On a court application the Secretary of State must have at least 14 days' notice and can appear at the hearing, and the court can ask the liquidator to report on why the company failed.

Permission is never backdated. Debts run up under a prohibited name before the court agrees can still fall on you personally.

How does the rule 22.4 notice for a successor company work?

The rule 22.4 notice lets a former director carry on the old business under its old name once that business has been bought from the liquidator, administrator, administrative receiver or CVA supervisor, provided the notice goes to creditors and The Gazette first.

It fits a sale arranged by an insolvency practitioner, such as a pre-pack, and it is strict. The Insolvency Service's guidance stresses these points.

• The whole business must change hands. The whole, or substantially the whole, of the business has to be acquired. Buying only the right to use the name does not count.
• An office-holder must arrange the sale. The liquidator, administrator, administrative receiver or CVA supervisor has to make the arrangements, and the Insolvency Service considers the company must already be in one of those procedures when notice is given.
• Notice comes first. Send it to every creditor whose name and address you know or could find with reasonable enquiries, and publish it in The Gazette, before you act under the name and within 28 days of completion, even if the price is paid by instalments.
• The content is prescribed. The notice must identify the old company, give your name and address, state the prohibited name, say that breaching section 216 is a criminal offence and include the wording in rule 22.5.
• The responsibility is yours, not the insolvency practitioner's. If you are already using the name, it is too late to give notice.

What happens if a director breaches section 216?

A director who breaches section 216 commits a criminal offence that can bring up to two years in prison, and under section 217 becomes personally liable for the debts the new company runs up while they help manage it.

Under Schedule 10 to the Act the maximum is two years' imprisonment, a fine or both on indictment, or six months, a fine or both on summary conviction. The personal liability is joint and several with the new company, so its creditors can pursue the director for the whole of a debt. It extends to anyone managing the company who acts on the instructions of someone they know to be in breach.

Three further consequences can follow.

• Confiscation. On conviction, the court sometimes makes an order to confiscate the proceeds of crime.
• Disqualification. A breach can lead to director disqualification, a ban of up to 15 years on running any company.
• Complaints are followed up. Anyone can report a suspected breach to the Insolvency Service, which may ask the director to put things right or pass the case to its Legal Services Directorate to consider a criminal investigation.

Can a director buy back the business in a pre-pack administration or from a liquidator?

A director can buy back the business of an insolvent company from its administrator or liquidator, and the Insolvency Service accepts that the best offer sometimes comes from the former directors, provided the sale is properly valued and disclosed to creditors.

In company administration, a sale agreed before the administrator is appointed and completed straight afterwards is a pre-pack administration. Where the buyer is a connected person, meaning a director or shadow director, an associate of theirs or a connected company, these safeguards apply.

• The eight-week rule. Under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, an administrator cannot sell all or a substantial part of the business to a connected person in the first eight weeks unless the creditors approve or the buyer obtains a qualifying report from an independent evaluator.
• The evaluator. They must hold professional indemnity insurance, must not be connected with the company or the buyer, and must not have advised either on insolvency or rescue in the previous 12 months. The report says whether the price and the grounds for the sale are reasonable, and goes to creditors and Companies House.
• A "case not made" opinion. If the evaluator is not satisfied, the administrator can still proceed but must give creditors a statement of reasons.
• SIP 16. Statement of Insolvency Practice 16 requires the administrator to explain a pre-pack to creditors with the first notification and within seven calendar days of the sale, covering the marketing, valuations, buyer and price, and to include that statement in the proposals filed at Companies House.
• Sales by a liquidator. The eight-week rule applies only in administration. In a creditors' voluntary liquidation, SIP 13 requires the liquidator to justify a connected-party sale to creditors in the next report, including the alternatives considered.

How can a director buy back an insolvent company's business properly?

A director buys back an insolvent company's business properly by taking advice early, paying a price backed by independent valuation and marketing, meeting the connected-party rules and giving any name notice before the new company trades under the old name.

An insolvency practitioner advising the old company acts for it and, once appointed, in its creditors' interests, which is why SIP 16 expects a director who may buy to take independent advice. A purchase usually runs in this order.

How does the Insolvency Service deal with abusive phoenix companies?

The Insolvency Service tackles abusive phoenix companies by reviewing the conduct report sent after every insolvent liquidation or administration, seeking disqualification, winding companies up in the public interest and prosecuting, and in 2025 to 2026 its phoenix investigations led to 87 disqualifications.

Its annual report for that year records 148 completed civil investigations into companies where it found abusive phoenixism, with 18 companies shut down and five directors convicted. The 2025 Autumn Budget gave it £25 million over five years for 50 more posts, and its September 2026 strategy says that by 2028 a 50-strong taskforce will use better data, and closer work with Companies House and HMRC, to catch high-risk cases sooner.

One-off commercial disputes, such as a single unpaid supplier, are not something it takes up unless they are part of a wider pattern. HMRC has its own powers: under Schedule 13 to the Finance Act 2020 it can issue a joint and several liability notice making an individual personally liable for the tax of the old companies and the new one, where all of the following apply.

• At least two companies the person was a director, shadow director or participator of entered an insolvency procedure in the last five years while owing tax or with returns outstanding.
• A new company connected to the same person carries on the same or a similar trade.
• The old companies' unpaid tax is more than £10,000 and more than half of what they owe their unsecured creditors.

Why speak to NTF about a phoenix company or reusing a company name?

NTF Corporate Solutions is a specialist insolvency practice whose advice on phoenix companies and section 216 comes from named practitioners, James Kaye and Nick Morgan, who are licensed by the Institute of Chartered Accountants in England and Wales and can act as administrator or liquidator.

As part of the NTF group, we have helped company directors since 2009. If you want to carry on in business, we will tell you plainly whether a sale to you is realistic, what the valuation, evaluator and name rules will require, and when you need your own adviser for the purchase. The first conversation is free, confidential and without obligation.