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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3840
Experience:  Solicitors 2 years plus PQE
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Good afternoon, I understand there is a rule (section 216)

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Good afternoon, I understand there is a rule (section 216) of the insolvency act 1986, that states that a person who was a director of an insolvent company may not be the director of another company with a similar name for 5 years from the date when the insolvent company went into liquidation, without permission from the courts. Does this apply when you have two companies of similar names (ie Hulme Financial Services, and Hulme Mortgages services) both trading and one then goes into administration? Do you still need court permission or would cease being a director of the company still trading etc, or is the rule exempt as both companies already existed pre the liquidation?


Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Did you become a director of both Companies at the same time? There are three exemptions contained in the Insolvency Rules 1986 Rule 4.228 - 4.230 onward - one of those states:
4.230. The court's leave under section 216(3) is not required where the company there referred to, though known by a prohibited name within the meaning of the section—
(a)has been known by that name for the whole of the period of 12 months ending with the day before the liquidating company went into liquidation, and
(b)has not at any time in those 12 months been dormant within the meaning of section 252(5) of the Companies Act.
I look forward to hearing from you.
Kind regards AJ
P.S My apologies please ignore my first post.
Customer: replied 3 years ago.

Hi - no the first company was a couple of years before (it is the first one tht is now insolvent). the second one was set up prior to the first going into liquidation.

Thank you.
If the second one was set up in the 12 months prior to the first going into liquidation then you will need to apply to court to use the name. It is a fairly common application and any competent insolvency solicitor can do it, it is just a bit on the expensive I d estimate about £2,500 plus. You really need to do otherwise you risk personally liability for the old company debts and criminal record.
If the Second was set up more than 12 months before the first one went into liquidation, then as long as it was not a dormant company, you wont need to make any such application.
Kind regards
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