Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Prohibited name definition

What does Prohibited name mean? A prohibited name is a company or business name that a former director of an insolvent company is barred from reusing when promoting, forming or managing another entity (a phoenix company). In England & Wales and Scotland, the term is statutory: Insolvency Act 1986, s 216. For five years after insolvent liquidation, a person who was a director in the 12 months before liquidation must not be involved with a company or business using a name by which the liquidated company was known in that 12‑month period, or a name so similar as to suggest an association. Breach is a...

Re-use of Company Names after Insolvent Liquidation: Directors’ Restrictions, Sanctions and Exceptions under Section 216 Insolvency Act 1986 (England and Wales and Scotland)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

The purpose of section 216 of the Insolvency Act 1986

Section 216 of the Insolvency Act 1986 (IA 1986) is designed to deter phoenix companies from disadvantaging creditors by demanding greater openness about re‑using company names. A phoenix company typically arises where a director or board operates a successor business with a similar name, transferring the valuable elements from the company in liquidation while its creditors are left unpaid. Re‑adopting the name is widely viewed as a tactic that can mislead creditors into believing they are dealing with the original entity, so this behaviour—often called phoenixing—attracts mistrust. The Insolvency Service has issued guidance on the law that applies when a business is carried on through a succession of companies, each of which becomes insolvent—so‑called ‘phoenix companies’. In certain situations, however, buying the business and assets of the company in liquidation and continuing to trade can have benefits, particularly for employees, and may generate sale proceeds for the insolvent company that might not otherwise be available...

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Web page updated on 21/05/2026

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