Section 216 of the Insolvency Act 1986
Specialist guidance on the re-use of company names following insolvent liquidation and the restrictions on directors.
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Specialist and practical support at every stage.
What is a prohibited name under S216?
Any name by which the liquidated company was known in the 12 months preceding liquidation, including trading names/styles, or any similar name which suggests an association with the liquidated company.
Who does S216 apply to?
Any person who was a director/shadow director of the liquidated company in the 12 months preceding liquidation.
Extent of the restriction
Prohibits directors/shadow directors of the liquidated company from being a director of, or being involved in the management of, a new entity using the same/similar name to the liquidated company. To act in contravention of S216 is a criminal offence, and can result in a fine and/or imprisonment, director disqualification and, potentially, being held liable for debts of the new company.
How long does the restriction last?
A period of five years after the date of liquidation.
Exceptions to S216
- Where the new entity purchases the whole, or substantially the whole of the business in liquidation, from the Liquidator (Rule 22.4 of the Insolvency Rules 2016).
- Court application made within seven days of the date of liquidation (Rule 22.6 of the Insolvency Rules 2016).
- Where a director was involved in a company using a similar name which has been trading for at least 12 months prior to the liquidation (Rule 22.7 of the Insolvency Rules 2016).
How can Justitia help you?
Where the new entity purchases the whole, or substantially the whole of the business in liquidation, from the Liquidator (Rule 22.4 of the Insolvency Rules 2016), Justitia will guide you through the process. We will liaise with the Liquidator and the director throughout the process, thus ensuring that what becomes a prohibited name under S216 can be used legitimately in a new entity going forward.
The restriction explained
Under Section 216 of the Insolvency Act 1986, it is a strict criminal offence for a person who was a director or shadow director of a company in the 12 months before it went into insolvent liquidation to be involved in a new business with the same or a similar name.
How we help: Justitia assists directors in navigating these severe restrictions. We provide specialist advice and assistance with one of the statutory exceptions (purchase of the business from the liquidator with proper notice) in order to avoid potential criminal liability, director disqualification and personal liability for the new company’s debts.
Require Section 216 Guidance?
Speak directly with our specialist, Diane Dunion, for confidential and expert advice on the re-use of a company name and Section 216 compliance.
Direct Phone
07947 521923Email Diane Dunion
[email protected]Why use Justitia’s services to re-use a company name
A rare specialism handled with speed, clarity and commercial judgement.
Specialist knowledge
Section 216 is a niche and often misunderstood area of insolvency law. We deal with it day in, day out.
Speed and deadlines
The process under Rule 22.4 is extremely time-critical. We will ensure that the process is followed compliantly and completed by the statutory deadline.
Clear Communication
We explain the process in plain language and maintain a clear line of communication with directors throughout the process.
Discreet and confidential
We handle every matter sensitively and confidentially, protecting your position throughout.
Our Section 216 process
A clear, time-critical process for keeping directors on the right side of the restriction.
1
Initial consultation
We take the full picture — the company that failed, the proposed new venture, and the name you want to use.
2
Prohibited name assessment
We consider whether the intended name is a prohibited name caught by Section 216, or one so similar as to suggest a connection.
3
Reviewing the exceptions
We assess whether a statutory exception applies — a successor-company purchase, leave of the court, or an established name.
4
Structuring the compliant route
We advise on the safest lawful way forward and map out exactly what needs to happen, and by when.
5
Notices
We prepare the required Notices under Rule 22.4 and ensure that the statutory deadline is adhered to.
6
Completion of Process
We will notify you when the process is completed and provide you with a copy of the relevant Statutory Notice.
Why it is so important to get S216 right
Early and specialist advice ensures that you avoid potential legal action which may follow the re-use of a prohibited name.
Avoid criminal liability
Stay on the right side of the law and avoid the risk of a fine, prosecution or imprisonment.
Protect your personal assets
Prevent personal liability for the debts of a new company under Section 217 of the Insolvency Act 1986.
Keep trading lawfully
Continue a viable business through a compliant route, rather than having to walk away from it.
Preserve your directorship
Reduce the risk of disqualification and the reputational harm that a breach can bring.
Act in time
Move within the strict statutory deadlines so the available exceptions stay open to you.
Clarity and peace of mind
Know exactly where you stand, and what you can and cannot do, before you commit.
What our clients say
Real feedback from directors and insolvency practitioners we have supported through the Section 216 process.
Facing a Section 216 issue?
Speak to a specialist about your options before you act — early advice is critical.