Section 216 Insolvency Act 1986 prohibits a director of a company that goes in to insolvent Liquidation from running a business that uses the same or a similar name to the old company. That includes trading names, brand names and trade marks. The prohibition applies to anyone who was a director of the old company (whether formally appointed or not) in the 12 months before it went in to Liquidation and lasts for the next 5 years. The prohibition applies to any business and not just to limited companies. Breach of the so called “prohibited names” provisions can result in personal liability for the debts of the new business, criminal prosecution and disqualification from acting as a director.
The relevant rules now dealing with the exceptions are contained in new rules 22.1 - 22.7.
The three exceptions remain broadly the same but there are some key differences to note.
Exceptions to the prohibition
The Insolvency Service has produced a form compliant with r22.4 (replacing old form 4.73, the form on which notice was given).
In terms of gazetting, r22.4(2) suggests that the entirety of the contents as prescribed in r22.4(3)(b) (and the statement in r22.5) should be gazetted. There already appears to be some difference in approaches in terms of gazette adverts after 6 April. Given the contents of the new rules and the very severe penalty for breaches of s216, and we suggest the full notice contents are published.
For more information about this article, please contact a member of our Restructuring & Insolvency team.
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