Section 216 Prohibitive Name Question

[Porky]

Hi All,

Company “ABC Limited t/a Name” files for CVL to liquidate - Has 2 Directors.

IP for ABC Limited attempts to secure best value

“Name Today Ltd” a company registered establish a fraction over 12 months earlier bids and is successful for IP but has four directors including same two Directors. It wants to continue using “Name” as it’s already included in its registered name
Question:-

Would the 12 month rule allow “Name Today Ltd” to continue using the prohibitive Name? In its title as it’s now going to be using the brand assets of ABC Limited”

If not, should “Name Today Ltd” publish gazette note confirming use of “Name” that was used the closed business by or do they need to apply for court order?

Should the two directors resign so that they don’t risk a breach of 216

Anyone, have any thoughts on this, it’s obviously a situation I’m currently looking at and wondering best way to proceed.

Thanks in advance

Pork’s

 

[Lee Green]

So long as Name Today Ltd has been trading for the past 12 months you are fine. But i note you simply say registered/established.​

Third excepted case​

22.7. The court’s permission 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 1169(1), (2) and (3)(a) of the Companies Act(1).


A further point, you suggest that the other two directors could resign in order to avoid a breach. Remember that 216 isnt just applicable to people in an official role as director, If you are indirectly involved you can still breach 216.

 

[Porky]

I thank you @Lee Green for that detailed reply.

It’s not dormant it’s been doing low level dev work in that time but now wants to go up a gear, it’s bid for ABC Ltd included offer to TUPE its staff hence why it wants to ensure it’s not in breach of 216 in respect of ABC Ltd

216 really is something to be aware of that’s for sure

 

[Lisa Thomas]

Given the Insolvency Services are now taking these breaches a lot more seriously and properly reviewing them, I would suggest you still get a solicitor to frank this deposit the fact it sounds like the exemption applies.

Despite the added cost, it's definitely best to dot the i's and cross the t's.

I can recommend an insolvency solicitor if needed.

PS good luck with the bid.