It may upset creditors of the old business but is legal if done properly. It is an effective tool to help a company that had a one off hit and needs to start again.
In more detail
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 valued and 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.
- The sale of any assets has been overseen by a Licensed Insolvency Practitioner acting at the liquidator and not sold in advance.
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 qualified insolvency practitioner.
