When I talk to my friends or I’m out networking it is often difficult to describe or summarise what I/we at PBC do, or the benefits of an insolvency practitioner.  We are often called vultures or undertakers.  There are many casualties of a company going bust, money is an emotive subject, and every party is a victim of some sort which no-one wants to become.

Before meeting us the ‘directors’ of the companies we meet are bearing the brunt of the pressure and experience high levels of stress.  They are trying their hardest to survive in the best way they know.  It is difficult to make the decision to seek help or admit that it is needed. 

When they do decide to seek advice, this often relieves that stress, even just talking it through and putting things into perspective is a weight off their shoulders.  Last week, Ian Cooke and I met with a director and the change in emotions was visible to see.  Their emotions moved from ‘agitated and uptight’ to ‘relieved’ and more ‘relaxed’ during the time we spent with them. 

Often people forget that financial difficulties could affect all of us and it could be one of many factors that tip that balance from successful and profitable or treading water, to being unable to pay your debts as and when they fall due.  Just one bad debt or loss of major customer amongst other things just a few of the examples.  A director has additional responsibilities and worries, such as ensuring their staff are paid along with adhering to their statutory duties.  They have often put their own cash in to survive, are the first to not get paid and have put their own blood and sweat into a venture only to see it potentially fail.

This is why my advice would always be to seek advice at an early stage.  It may not be as bad as you thought, and if it is, a problem shared is a problem halved in any event.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency on 01604 212150 (Northampton),  01908 488653 (Milton Keynes) or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.

#insolvencypractitioner #liquidation #northampton #miltonkeynes

How often does the company name become the brand that your customers know?  Indeed, if you were to assess the value of the company assets, what value do you consider placing on that brand in a going concern scenario?

Taking the above into consideration, what then happens if the company (for any reason) has to go into an insolvent liquidation and, because you see a benefit in saving the business, you wish to set up a new company, using that brand (ie company name)?

Sections 216 & 217 Insolvency Act 1986 (“the sections”) provide that when a company enters into an insolvent liquidation then a person who was director (whether de jure, de facto or “Shadow”) of that company may not re-use that “Prohibited name.  Section 216 imposes a strict liability criminal offence while section 217 creates a personal (civil) liability on those who breach these provisions.  Placing the new company under the directorship of your spouse or relative does not circumvent these strict provisions either as a person who knows at the time there is a contravention of the prohibited name provisions can also be held personally liable.

The Association of Business Recovery Professionals recently lobbied the Government Insolvency Service for proposed changes to these provisions, to include companies entering into administration and those companies where a simple application has been made for their striking off. 

The aim of the sections is to prevent “Phoenix” companies from causing a disadvantage to creditors where directors seek to offload the company debt and enjoy a freedom to trade going forward.  When you compare the corporate figure for 2021/22 (524,046 strike offs versus 22,395 insolvent liquidations) then it is understandable why the current provisions require some reform in order to protect creditors.

So, what can you do if faced with this scenario?

Contravention of the above provisions cannot be retrospectively remedied so seek advice at the earliest possible time. 

Secondly, there are exceptions that can be relied upon.  However, given the strict liability status of these sections, any error in following those exceptions can lead to a contravention.

If you require any advice or assistance on any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk.  Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.