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Can I Buy Back My Company Name After Liquidation?

Can I Buy Back My Company Name After Liquidation?

Quick Answer Summary

Yes, you can buy back and reuse your company name after liquidation, but you must follow strict legal procedures to avoid prosecution. You typically need to purchase the business assets and goodwill from the appointed insolvency practitioner and issue a specific statutory notice to creditors within 28 days.

Simple Explanation

When a limited company goes into liquidation, its legal life ends. However, the business brand—its name, logo, website, and customer reputation—often still has value.

Many directors wish to restart their business using the same or a very similar name. This is often called a “phoenix company”.

While restarting is legal, the UK government has strict rules to prevent directors from closing a company to avoid paying debts, only to open a new one with the exact same name the next day. This confuses creditors and customers.

To stop this, there is a general ban on reusing the name. However, the law provides clear exceptions that allow honest directors to rescue the business and legally reuse the name, provided they act transparently and buy the assets at a fair price.

Legal / Official Process

The primary law governing this is Section 216 of the Insolvency Act 1986.

The Restriction

Once a company enters liquidation, any person who was a director in the 12 months prior is banned from being involved in a company with a “Prohibited Name” for 5 years.

A Prohibited Name is defined as:

  • The same name as the liquidated company.
  • A name so similar that it suggests an association with the liquidated company.

The Exceptions (How Easy Liquidation do it legally)

To reuse the name legally, you must qualify for one of the three statutory exceptions under the Insolvency Rules:

  • Purchase from the Liquidator (Rule 22.4): You buy the whole or substantially the whole of the business from the liquidator. You must then send a formal notice to all creditors and publish it in the London Gazette within 28 days of completion.
  • Court Permission (Rule 22.3): You apply to the Court for permission to use the name. This application must usually be made within 7 days of the liquidation starting.
  • Existing Use (Rule 22.5): The new company has already been trading with that name for at least 12 months before the liquidation of the old company and was not dormant.

Director Position

Reusing a name without following the correct procedure is a criminal offence. It is vital to understand the risks before acting.

Risks and Penalties

If you contravene Section 216:

  • Personal Liability: You become personally liable for all debts of the new company. The “corporate veil” is lifted.
  • Criminal Record: It is a criminal offence punishable by a fine or imprisonment.
  • Disqualification: You may be banned from acting as a director for up to 15 years.

Common Misunderstandings

“I changed one word”: Simply adding “UK” or “Services” to the end of the old name does not work. If the name suggests an association, it is prohibited.

“My accountant said it’s fine”: General accountants often miss the nuances of insolvency law. Only a licensed insolvency practitioner can guide this sale safely.

“Nobody will check”: Creditors and HMRC actively monitor for phoenix companies. If the new company fails, the liquidator will investigate the name usage immediately.

Eligibility Rules

Can you reuse your company name? Use this logic to check your position:

  • IF you buy the business assets from the liquidator AND publish a Gazette notice within 28 days → THEN you may reuse the name legally.
  • IF you apply to Court for permission within 7 days of liquidation → THEN you may continue using the name while the court decides (up to 6 weeks).
  • IF you have another company that has traded with that name for over 12 months → THEN you may usually continue using it.
  • IF you simply register a new company with a similar name without buying assets → THEN you are likely breaking the law (Section 216).
  • IF the name is distinct and completely unrelated → THEN Section 216 does not apply.

How This Connects to Insolvency Options

The ability to reuse a name is tightly linked to the liquidation process. You cannot buy the name back if the company is merely “struck off” or dissolved; it must go through a formal liquidation process where assets are valued and sold.

This is most relevant during a Creditors’ Voluntary Liquidation (CVL). In this process, the director acknowledges the company cannot pay its debts but acts responsibly to close it.

By working with a licensed insolvency practitioner, you arrange for the valuation of the company’s goodwill (the value of the name and reputation). You then pay this value into the liquidation pot for the benefit of the creditors. This transforms an insolvent company problem into a legitimate business rescue, protecting you from personal liability.

If you are considering closing your business but want to restart, you should review our Company Liquidation Services to understand how the asset sale fits into the timeline.

Step-by-Step Actions (What To Do Next)

If you intend to restart your business using the same name, follow this sequence:

  1. Consult an Insolvency Practitioner (IP): Do this before you take any action. Explain your intention to buy the business back.
  2. Get Professional Valuations: An independent agent must value the company assets and goodwill (the name). You cannot just make up a price.
  3. Enter Liquidation: The insolvency practitioner places the old company into liquidation.
  4. Purchase the Assets: You pay the agreed valuation price to the liquidator for the assets and name.
  5. Issue Statutory Notices: Your solicitor or insolvency practitioner will draft a specific notice (Rule 22.4 Notice).
  6. Publish in the Gazette: This notice must appear in the London Gazette within 28 days of the purchase.
  7. Notify Creditors: Send the same notice to every creditor of the old company.

Practical Real-World Scenarios

Scenario A: The Small Trade Restart

Situation: A plumbing firm, "Smith & Sons Heating Ltd," goes bust. Mr. Smith wants to start "Smith & Sons Repairs Ltd."

Outcome: The names are too similar. Mr. Smith buys the van and tools from the liquidator. He must also pay for the "goodwill" of the name and publish a Gazette notice. If he fails to publish the notice, he becomes personally liable for the new company's debts.

Scenario B: The Tech Startup (Intangible Assets)

Situation: A software company fails. The value is entirely in the code and the brand name "TechFlow."

Outcome: The director buys the intellectual property rights and the brand "TechFlow" from the liquidator. Because there are no physical assets, the valuation focuses on the brand. The director follows the notification rules and successfully restarts.

Scenario C: The HMRC Flag

Situation: A director closes a marketing agency owing £50,000 to HMRC. She opens a new agency with the same name the next day without buying the assets or notifying anyone.

Outcome: The director would not be personally liable for the £50,000 debt of the old company purely because of the name reuse. At Easy Liquidation, our advice is highly valuable in situations like this. Taking early professional guidance can help you avoid breaching the rules, protect yourself from personal liability, and ensure the correct legal process is followed.

How Easy Liquidation Can Help

Dealing with a failed business is stressful, but wanting to preserve your hard work and brand is natural. You do not need to lose your business identity, but you do need to tread carefully.

Speaking to the team at Easy Liquidation provides immediate clarity. We handle the technical side of the liquidation and guide you through the asset purchase process.

We ensure:

  • Accurate valuation of goodwill.
  • Correct legal notices are drafted.
  • You are fully protected from personal liability claims.
  • The restart is compliant and transparent to creditors.

FAQs

How much does it cost to buy back my company name?

The cost depends on the independent valuation of the goodwill. It is not a fixed fee; it reflects what the name is worth in the open market.

Can I just change the name slightly?

No. If the new name suggests an association with the old company (for example, "ABC Trading Ltd" to "ABC Services Ltd"), it is still a prohibited name.

What happens if I don't publish the Gazette notice?

You lose the legal protection of the exception. You will be personally liable for the debts of the new company and may face criminal prosecution.

Can I be a director of the new company?

Yes, provided you are not currently disqualified and you follow the Section 216 exceptions (purchase and notification) correctly.

How long does the ban on the name last?

The restriction on using a prohibited name lasts for 5 years from the date the company went into liquidation.