Many UK directors wonder if it’s possible to close a limited company and start afresh. Chris Worden explains the legalities, risks, and best practices for directors considering this route.
- Yes, you can liquidate and start again—if done legally
- Cutting corners or hiding assets can lead to bans or prosecution
- Section 216 restricts reusing company names
- Asset buybacks must be at fair market value
- Transparency and compliance are essential
Key Points
- Liquidation is legal if you follow the rules
- Directors must not hide assets or dodge debts
- Section 216 restricts reusing company names for 5 years
- Asset sales must be independently valued
- Administration and pre-pack options exist
- Proper planning and advice are crucial
Understanding Liquidation and Starting Again
Liquidating a company and starting a new one is possible, but only if you comply with UK insolvency law. Attempting to hide assets or avoid debts can result in director bans, personal liability, or even criminal prosecution.
Legal Framework and Section 216
The Fraud and Recovery Act 2026 will allow investigations up to 12 years after insolvency. Section 216 of the Insolvency Act prohibits directors from reusing the same or similar company name for five years unless specific exemptions apply.
How to Liquidate and Start Again Properly
- Close the insolvent company properly: Use a licensed insolvency practitioner for a Creditors’ Voluntary Liquidation (CVL) or administration.
- Comply with Section 216: Don’t reuse the old company name unless you qualify for an exemption, such as having a similarly named company trading for over 12 months, court approval, or buying the name from the insolvency practitioner and notifying creditors and the London Gazette.
- Buy back assets at fair value: All asset sales must be independently valued and transparent. Offers should be close to the in-situ value to avoid criticism or legal challenge.
- Set up the new company correctly: Register a new name, open bank accounts, and ensure compliance with VAT and other obligations.
Administration and Pre-Pack Options
Administration is a rescue process where assets and goodwill can be sold to a new company, often via a pre-pack. This requires independent valuation and a short marketing period to ensure transparency.
Common Mistakes and How to Avoid Them
- Trying to hide or undervalue assets
- Reusing the old company name illegally
- Failing to notify creditors or the Gazette
- Not addressing the root cause of previous failure
What You Can and Can’t Keep
- You can keep business assets (if bought properly), your directorship (unless disqualified), staff (via TUPE), and your business model.
- You can’t keep the old company name without exemption, hide assets, or keep supplier relationships if they’re lost in liquidation.
Key Takeaways
- Liquidation isn’t the end—done right, it’s a fresh start
- Transparency, compliance, and independent advice are vital
- Chris Worden and Director First can guide you through the process
- Fix the underlying issues before starting again
Frequently Asked Questions
- Can I liquidate my company and start a new one?
- Yes, if you follow legal procedures and don’t attempt to hide assets or avoid debts.
- What is Section 216 and how does it affect me?
- Section 216 restricts directors from reusing the same or similar company name for five years after liquidation, unless exemptions apply.
- Can I buy back assets from my old company?
- Yes, but only at fair market value and through a transparent process with independent valuation.
- What happens if I break the rules?
- You could face director disqualification, personal liability for debts, fines, or even criminal prosecution.
- How can Chris Worden help?
- Chris Worden and Director First offer independent, impartial advice to guide you through liquidation and starting again legally.
Need advice on liquidation or starting again? Contact us today for confidential, expert support.
