Prohibited Names - s216 Insolvency Act & r4.228 Insolvency Rules
As anticipated in our earlier posts on phoenix companies here and here, the amendment to the Insolvency Rules to remedy the problem caused by the Court of Appeal decision in Churchill v First Independent Factors has now been published.
The relevant statutory instrument is The Insolvency (Amendment) Rules 2007, SI 2007/1974, which comes into force on 6 August 2007.
Comments (4) Read through and enter the discussion with the form at the end
If a director of a company (eg XYZ Limited) which is about to go into voluntary insolvent liquidation sets up a new company (Eg XYZ.com to the name) then on the date of insolvency writes a notice in the Gazette stating under rule Rule 4.228 that they "give notice that it is my intention to act in one or more of the ways specified in section 216(3) of the Insolvency Act 1986 in connection with, or for the purposes of, the carrying on of the whole or substantially the whole of the business of the insolvent Company under the following names: XYZ.com and XYZ would this be a breach of insolvency rules 216 or 217?
Daniel
What you suggest fulfils part of the requirements of Rule 4.228, the full details of which would need to be complied with to avoid contravention of s216. In addition to the Gazette notice you describe, the director would have to:
· acquire the business from the liquidator (because it is only in such circumstances that the r4.228 exemption applies);
· give individual notice to all the creditors on form 4.73;
· ensure the notice is compliant in detail, specifying his name, the insolvent company’s name and number and the prohibited name; and
· give and publish the notice before forming or being involved with the new company.
Chris
Dear Chris
Can you confirm that if the new company of a similiar name was set up (formed) before the notice was advertised that this would contavene s.216. The other criteria that you mentioned above seems to have been adhered too.
Gavin
Gavin
You will appreciate that I'm not giving legal advice here, but yes, the director in question must (as mentioned above) give and publish the notice before forming or being involved with the new company.
Chris