When a company is liquidated, all its assets are sold and these funds are used to repay creditors as far as possible. After this, the company is removed from the official register held at Companies House and the company then ceases to exist legally. Any debts that remain at the end of an insolvent liquidation process are written off, unless these have been personally guaranteed by the directors.
Can I close my limited company and open a new one?
Once a company is liquidated, directors are more often than not able to start trading again with a new company.
Legislation recognises that companies fail for a variety of reasons and it’s not usually the directors fault. Sometimes market forces result in business failure, or other factors outside directors’ control. Due to this, there is no blanket ban on the directors of an insolvent company being able to set up a new business following the failure of a previous one.
Despite this, directors do need to consider the rules surrounding reuse of a company name when starting again following liquidation. Reusing your liquidated company’s name, or using one which is so similar that it could mislead others into thinking it was the same company, is forbidden for the five years following liquidation.
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.
How to set up a new company following liquidation
Insolvency laws state that directors involved in a company during the 12 months prior to its liquidation cannot for five years:
Become director of a company with the same or a similar name
Be involved in forming, promoting, or managing a company with the same or a similar name
Stop Creditor Pressure
Liquidation Portal For Company Directors
decorative line
Reduce Stress - Lose Creditor Pressure
Clear & Simple Visual Dashboard - Track your Progress
If you start again with a new company you need to be very careful not to use the same or a similar company name. Section 216 of the Insolvency Act, 1986, lays down the rules surrounding the reuse of company names, but there are three exceptions to these rules:
1. Purchasing business assets from the liquidator
When you purchase the whole of the business, or substantially the whole, you may be able to use the same or a similar name to the liquidated company. Where assets are purchased from the liquidator, you would need to inform creditors of your intention to run a new company with the same or similar name, and also publicly advertise the fact in the Gazette.
2. Applying to court
You can apply to the court for permission to reuse the company name. This is called applying for court leave, and the application must be lodged with court no more than seven days following the liquidation of the old company. The court can grant ‘leave’ no more than six weeks from the application date.
3. Existing use of name
If the company was already known by this name during the 12 months before liquidation and it hasn’t been a dormant company during this 12 month period.
What to know when liquidating a company and starting again
Although it’s possible to start again after liquidating your old company, there are several issues to consider. Apart from the restrictions on reusing company names you may need to provide a security deposit for HMRC when you start up, if the old company left behind unpaid tax debts.
There may also be problems in securing new lines of credit particularly from those creditors who lost money during the liquidation. It’s possible that these suppliers will only be willing to trade with the new company on a cash-on-delivery basis, for example, given the liquidation of the old company.
Can I buy the assets of my old company during liquidation?
When a company is liquidated, the directors sometimes purchase their business assets via the liquidator with a view to setting up a new company. It’s crucial to ensure you pay a fair price for the assets, and this can be done by obtaining an independent professional valuation.
When a new company emerges using the assets of a liquidated business it’s known as a ‘phoenix’ company, and HMRC may require additional safeguards if they’ve been unable to recover tax debts. One of these could be a down payment on tax called an HMRC security bond.
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.
Will I need to give a HMRC security deposit?
If your old company had tax debts, HMRC may demand a security deposit when you set up a new company. This addresses their perceived risk of suffering further losses as a creditor of your new business. Security bonds or deposits can be requested for a variety of HMRC tax obligations including VAT, PAYE, and National Insurance.
Clearly, there’s much to consider when starting again after liquidating a company, but UK Liquidators are here to help. We’re liquidation specialists working from offices around the country, and can offer you a free same-day consultation. If you are considering liquidating your existing company and already have your eye on starting up again, we can help guide you through the process ensuring this is done in a way which is fully compliant with current insolvency legislation.
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.
This site uses cookies to monitor site performance and provide a more responsive and personalised experience. You must agree to our use of certain cookies. For more information on how we use and manage cookies please read our PRIVACY POLICY
