Chris is an Insolvency Practitioner regulated by the ICAEW since 2014,.
He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.
Yes. In most cases you can incorporate and run a new business after liquidation, but only if you avoid three legal tripwires: director disqualification, bankruptcy restrictions, and the five-year “prohibited name” rule under section 216 of the Insolvency Act 1986.
Liquidation itself does not automatically bar you from starting again. The restrictions arise from your personal status and from how you use the old company’s name or brand. Get those wrong and you risk criminal prosecution, and in some cases personal liability for company debts.
This guide walks through the UK rules step by step so you can restart safely.
Section 216 (prohibited name rule) applies only after insolvent liquidation, not after a solvent MVL.
How disqualification happens
The liquidator submits a conduct report to the Insolvency Service.
The Insolvency Service investigates unfit conduct.
Court proceedings (or an undertaking) may follow.
The court sets the ban (between 2 and 15 years).
Ban lengths range from 2–15 years depending on seriousness. Acting while disqualified is a criminal offence and may result in personal liability for company debts incurred during the breach (CDDA s.15).
Before starting again, search the Disqualified Directors Register to confirm your status.
Disqualification, Bankruptcy and Other Personal Restrictions
Acting while disqualified is a criminal offence and can lead to personal liability for company debts.
2. Bankruptcy or Bankruptcy Restrictions Order (BRO)
An undischarged bankrupt cannot act as a director or take part in the management of a company without court permission (CDDA s.11).
Bankruptcy usually ends after 12 months, but a BRO can extend restrictions up to 15 years.
Acting without leave is a criminal offence.
3. Criminal convictions
Certain convictions (e.g. fraud, fraudulent trading) may result in disqualification.
The Five-Year ‘Prohibited Name’ Rule (Section 216 Insolvency Act 1986)
If your company entered insolvent liquidation, and you were a director (or shadow director) in the 12 months before liquidation, you are generally prohibited for five years from:
Being a director of a company using the same or similar name
Being concerned in its management
Allowing it to use that name
A “prohibited name” includes:
The exact registered name
Any trading name used by the company
Any name so similar as to suggest an association
Breaching s.216 is a criminal offence. In addition, under section 217, a director may become personally liable for the debts of the new company incurred while the breach continues.
Three Legal Routes to Reuse the Old Name
Reusing the name is possible only via one of three statutory exceptions.
1. Purchase of the business from the liquidator (“28-day rule”)
You must:
Acquire the whole, or substantially the whole, of the business from the liquidator
Publish a notice in The Gazette
Send notice to all known creditors
Ensure notices are completed within 28 days of completion
Complete the process before using the name
Failing any step voids the protection.
2. Court permission (apply within 7 business days)
If you apply for court permission within 7 business days of liquidation, you may use the name for up to 6 weeks (or until the court decides).
If permission is granted, you may continue using the name.
If refused, you must cease immediately.
3. Prior continuous 12-month use
An existing company may use the same or similar name if it:
Used that name continuously for the 12 months before liquidation
Actively traded during that period
Was not dormant
This exception applies only to established companies, not brand-new ones.
Choosing a Safe New Company Name
If you do not rely on an exception, choose a clearly different name.
Red flags:
Minor spelling tweaks
Adding “UK”, “Group”, “Holdings”
Phonetic similarity
Same branding, signage or website suggesting continuity
The test is whether the average person would assume an association with the liquidated company.
The restriction follows the individual, switching to an LLP or sole trader does not avoid s.216.
Buying Assets From the Liquidator
You may purchase assets from a liquidator at fair market value.
Key safeguards:
Independent valuation
Transparent bidding process
Written evidence of price justification
If the previous procedure was administration (not liquidation), connected-party sales may be subject to additional requirements under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021.
Buying assets at undervalue risks the transaction being challenged.
Incorporating Your New Company – Fees and Process
You may incorporate immediately if no restriction applies.
Current Companies House incorporation fees:
Method
Fee
Online (digital filing)
£100
Same-day (software, before 3pm)
£156
Paper filing (IN01)
£124
If you are relying on a section 216 exception, ensure Gazette and creditor notices are correctly completed before trading under the reused name.
No Gazette notice is required if you choose a completely unrelated name.
Personal Liability and Hidden Risks
Starting again does not erase past duties.
Key risk areas:
Risk
Legal basis
Consequence
Wrongful trading
Insolvency Act 1986 s.214
Court contribution order
Fraudulent trading
Insolvency Act 1986 s.213
Civil liability + criminal sanctions
Acting while disqualified
CDDA 1986 s.13–15
Criminal offence + potential personal liability
Breach of prohibited name rule
IA 1986 s.216–217
Criminal offence + personal liability
HMRC may also require a VAT security deposit in cases of serious non-compliance or repeated insolvency.
Common Pitfalls (Mini Case Study)
A director liquidates ABC Installations Ltd.
He forms ABC Installation Services Ltd and starts trading immediately.
He intends to rely on the “purchase of business” exception but fails to notify creditors within 28 days.
Result:
Breach of s.216
Criminal offence
Potential personal liability under s.217
Lesson: meet every statutory requirement before using the name.
FAQs
1) Can I be only a shareholder, not a director?
Yes. Share ownership alone is not prohibited. However, if you are disqualified or bankrupt you cannot be involved in management. Acting as a shadow director can breach restrictions.
2) Does the five-year rule apply after an MVL?
No. Section 216 applies only after insolvent liquidation. A solvent MVL does not trigger it.
3) How different must a name be?
Different enough that a reasonable person would not assume an association. Cosmetic changes are rarely sufficient.
4) Can I keep the old domain name?
Only if lawfully acquired from the liquidator at fair value. Even then, it may create a “similar name” risk if branding implies continuity.
5) How soon can I invoice?
As soon as the new company is incorporated and lawfully entitled to use its name and assets.
6) Will my credit history affect funding?
Yes. Lenders commonly check director histories and previous insolvencies.
7) Do I need a Gazette notice if I use a different name?
No. Notices are required only if relying on a statutory exception to reuse a prohibited name.
8) Can a family member act as director while I advise?
Yes, but if you control decisions you may be a shadow director and caught by restrictions.
9) Can HMRC demand a deposit?
HMRC can require a VAT security deposit in cases of serious risk of non-payment.
10) What happens if I breach Section 216?
It is a criminal offence. You may also become personally liable for company debts incurred during the breach under section 217.
11) Can I keep the old phone number and signage?
Only if lawfully acquired and not misleading. Identical branding increases risk of being deemed “similar”.
12) Is administration different?
Yes. Section 216 applies only to insolvent liquidation. Administration alone does not trigger the five-year rule, but if liquidation follows, it may apply.
Final Compliance Checklist
Before incorporating:
Confirm you are not disqualified or bankrupt
Choose a compliant company name (or complete a valid s.216 exception)
Ensure any asset purchases are properly valued
Incorporate via Companies House and retain documentary evidence
With those steps cleared, you can lawfully start again.
