What is a phoenix company?

In short

A phoenix company describes a new company that has risen again from a previously failed company.  Quite often the old company will have gone into liquidation and the directors buy back the assets and start trading again in the same business under a different name.

It can upset creditors of the old business but it is legal if done properly.  It can be an effective tool to help a company that has had a one off hit and needs to start again.

In more detail

Nothing upsets creditors quite a like a phoenix as they think it is unfair that a business seems to have shed its liabilities and can carry on without them.  However, in most cases a phoenix is legal provided it meets certain criteria such as:

• The assets have been valued and sold at market value
• The new company does not use the same or a similar name without going through a careful legal procedure to comply with Section 216 of the Insolvency Act.
• The sale of any assets has been overseen by a licensed insolvency practitioner acting as liquidator and not sold in advance.

Some suppliers will not deal with a phoenix company and may impose stricter trading terms.  HM Revenue & Customers may well require a bond or deposit against future PAYE or VAT liabilities.

If you want to start again the best thing you can do is to seek professional advice early from a licenced insolvency practitioner.  Contacting us early is likely to give you more options - we can help, speak to one of our experts today on 0800 331 7417