Section 216 of the Insolvency Act 1986
The rule that prohibits a director of a company that has entered liquidation from being involved in another company using the same or a similar name for five years, unless one of the statutory exceptions applies.
Section 216 catches directors who would otherwise 'phoenix' a failed company by trading on its goodwill under a similar name. A breach is a criminal offence and exposes the director to personal liability for the new company's debts (section 217). The three exceptions in the Insolvency (England and Wales) Rules 2016 are: notice to creditors (Rule 22.4), application to court (Rule 22.6), and successor company already trading for at least twelve months (Rule 22.7). The first exception is the one most commonly used and is the route most prohibited-name Gazette notices document.
