Prohibited names

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The purpose of section 216 of the Insolvency Act 1986

The relevant provisions are sections 216 and 217 of the Insolvency Act 1986 (IA 1986).

These provisions are aimed at preventing phoenix companies from causing a disadvantage to creditors by creating more transparency surrounding the re-use of company names.

A phoenix company may typically be where a director or directors trade a successive company with a similar name, taking the valuable parts of the company in liquidation and leaving behind its creditors. The re-use of the name is seen by many as a way of deceiving creditors into thinking they are dealing with the same company. This practice, known as 'phoenixing', is therefore met with distrust by creditors.

Who is bound by IA 1986, s 216?

A person who was a director or shadow director of a company which goes into an insolvent liquidation (defined by IA 1986, s 216(7)) at any time in the 12 months immediately prior to liquidation is caught.

It also applies to a person who is involved in the management of the company and acts or is willing to

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