Case Puts Issue Of Re-Using Firm's Name Into Spotlight

Directors of companies going through the process of insolvency have been urged by a business expert at Irwin Mitchell to be aware of the consequences when looking to re-use the firm’s name, following a Court of Appeal ruling.

The Court has dismissed an appeal in relation to the case of R v Weintroub, in which the former directors of Albert Packaging Ltd were found guilty of contravening section 216 of the Insolvency Act 1986.

It was ruled that they had used the company name following its liquidation in April 2006, at a time when it was prohibited as they had not sought permission from the Court to do so.

The pair appealed against the order to pay amounts based on their contribution to the firm and what they were paid through it following April 2006, but it has not been upheld.

Andrew Walker, a Partner in Irwin Mitchell’s insolvency team and chair of R3 in Yorkshire, urged directors in a similar position to take note of the decision.

He explained: “This decision means directors of firms which are insolvent need to recognise and understand what they are able to do following liquidation, as well as how they can be held to account if they fail to consider such issues and comply with the law.

“Not only can they be held liable for debts on a further insolvency but the re-use of a company’s name after liquidation without following the appropriate procedures will lead to criminal penalties as in this case.”