Director disqualification reasons - Phoenix companies and reusing company names

A Phoenix Company may be used to prefer favoured creditors, mislead creditors and the public into believing the same business is continuing to trade (even though it has entered into liquidation) or enabling the continued provision of credit to pay for that director’s lifestyle.

Under current legislation (section 216 of the Insolvency Act 1986) this is prohibited and is both a criminal offence (which a liquidator is legally required to report to governmental authorities and which can attach a director disqualification order) and a civil offence (where the director can be pursued for losses incurred by creditors of the Phoenix Company.

The breach of this legislation is quite commonly a basis for director disqualification proceedings and it is usually a difficult issue for an individual without legal knowledge to deal with. However there are statutory exceptions to the rule (which perhaps should be considered when it is intended to continue trading in the old company name) which can be relied on to rebut any allegations of unfitness.

Contact an expert director disqualification solicitor now

Francis Wilks & Jones is the county’s leading firm of director disqualification solicitors. We are genuine experts in what we do with a combined experience of over 50 years in director disqualification claims. Contact one of our friendly solicitors now for your consultation.


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