Starting a new company as a director after company liquidation
If your company has had to enter liquidation due to severe financial difficulties, you may be wondering where you stand as a director and what the future may hold for you, particularly when it comes to running a business again.
Generally speaking, you can be a director again even if you have had a company which has been liquidated, however, directors will face certain restrictions when it comes to reusing the name of a liquidated company; these rules are in place to protect creditors and other stakeholders.
In some cases, directors can receive a disqualification order following the liquidation of a limited company if there are proven instances of wrongdoing, including fraudulent trading.
What happens to the director of a company in liquidation?
Following an insolvent liquidation process the actions of directors during the period leading up to the company becoming insolvent are investigated. While the vast majority of these investigations find no wrongdoing on the part of the directors, if any form of misconduct or wrongful trading is uncovered, this could affect your ability to be the director of another company.
This is because, under the Company Director Disqualification Act (CDDA), you could potentially be disqualified from acting as a director for up to 15 years.
2-5 years, typically as a result of negligent conduct
6-10 years, usually for more serious misconduct
11-15 years, typically reserved for fraudulent activity
Concerned about National Living Wage and NI increases?
With the rates of both National Living Wage and employer National Insurance Contributions increasing in recent years, this additional cost of employing staff has added more pressure onto already squeezed cash flows. If you are worried about the impact this is having on your company's finances, talk to the experts at UK Liquidators. As licensed insolvency practitioners we can explain your options and help you plot a way forward. Call today on 0808 253 9878.
Can I run a new company after liquidation?
Director disqualification orders are extremely rare and following the vast majority of liquidations, directors are free to incorporate a new company and begin trading.
There are certain restrictions on starting again as director of a company after a business folds, however, and one of these comes to reusing the liquidated company’s name.
Under Section 216 of the Insolvency Act, 1986, you cannot use the same or a similar name of the company which has been liquidated unless you have express permission from the court.
These restrictions are in place to prevent directors from deliberately running up company debts, and then moving on to a succession of other companies all trading under the same name, potentially causing confusion to creditors who are unaware of the previous liquidations.
Under certain circumstances you may be able to use the same, or similar, name for your new company, if:
You purchase all, or a substantial proportion, of the company that’s been liquidated. You must also ensure that all stakeholders are informed of your intention to use a similar name.
You’re granted permission from the court to use a similar name
If your new company has been trading using the name as the liquidated company for the whole of the 12 months prior to the date of liquidation
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Seeking professional insolvency advice if you’re worried that your business will fold
It’s possible to be a director again after your business folds, but this requires careful consideration to ensure you don’t breach the laws in this respect, as they’re stringently applied by the Insolvency Service.
If you’d like more information on company liquidation, and the potential ramifications for yourself as a director, please get in touch with UK Liquidators. We’re liquidation specialists and can provide the advice you need during times of financial crisis.
We’ll ensure you adhere to all the relevant rules and restrictions, whilst also explaining your options for the future. We can offer you a free, same-day consultation with one of our experienced partner-led team, operating in our offices around the country.
Start your online liquidation today
If you have decided liquidation is the right option for your limited company, you can take the first step and begin the process online using our online portal. Starting the process is quick, simple, and can be done at a time that suits you. Your information will be submitted to your local UK Liquidators insolvency practitioner who will be with you every step of the way. Click here to start your company’s liquidation online.
Jonathan Munnery
Insolvency & Restructuring Expert | 20+ Years Insolvency Experience
Jonathan is a Partner at Real Business Rescue and member of both the Insolvency Practitioners Association (MIPA) and The Association of Business Recovery Professionals (MABRP). Jonathan has over 20 years’ experience guiding directors through CVL and MVL processes, helping them understand their options and navigate financial distress with clarity and compassion.
IPA Member MABRP Member IPA Regulated
“ Directors often wait too long before seeking advice. The earlier you call, the more options remain available to you — and the better the outcome for everyone involved. ”
Jonathan is a Partner at Real Business Rescue and member of both the Insolvency Practitioners Association (MIPA) and The Association of Business Recovery Professionals (MABRP). Jonathan has over 20 years’ experience guiding directors through CVL and MVL processes, helping them understand their options and navigate financial distress with clarity and compassion.
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