A Phoenix Company describes a new company that has risen again from the ashes of a previously failed company. Quite often the old company will have gone into liquidation and the directors buy the assets and start trading again in the same business.
Nothing upsets creditors quite like a ‘phoenix’ as they think it is unfair that a business seems to have shed its liabilities and can carry on (without them).
In most cases, a phoenix is legal provided it means certain criteria such as;
- The assets have been sold at market value
- The new company does not use the same or similar name without going through a careful legal procedure to comply with section 216 of the Insolvency Act (and that)
- All old company creditors have been treated equally
Some suppliers will not deal with a phoenix company and may impose much stricter trading terms. HM Revenue and Customs may well request a bond or deposit against future PAYE or VAT liabilities.
If you want to start again the best thing you can do is take professional advice early on from a suitably quailed insolvency practitioner.