Starting a company after previous company failure

Starting a new company after a previous one has failed:

The short answer is yes, in most cases you can start a new company after a previous one has failed. However, there are some important distinctions depending on how your old company came to an end and what role you played in its failure.

If your old company was simply dissolved or struck off:

There is generally no restriction on you forming a new company or acting as a director. You are free to incorporate a new company at Companies House in the usual way.

If your old company went into insolvent liquidation, administration, or CVA:

You can still usually start a new company, but you need to be aware of several potential restrictions.

1. Director disqualification. If the Insolvency Service investigated your conduct and you were made subject to a disqualification undertaking or a court disqualification order under the Company Directors Disqualification Act 1986, you cannot act as a director of any company for the period specified, which can be between 2 and 15 years. Acting in breach of a disqualification order is a criminal offence and can also make you personally liable for the debts of any company you are involved in during that period.

2. Reuse of company names. Section 216 of the Insolvency Act 1986 restricts you from reusing the name of a company that has gone into insolvent liquidation, or a name that is so similar as to suggest an association with it, for a period of five years. This includes trading names, not just the registered name. Breach of this rule can again result in personal liability for the new company's debts under section 217. There are limited exceptions, for example if you buy the business from the liquidator and follow the prescribed notice procedure, or if you obtain court permission.

3. Wrongful or fraudulent trading. If you were found to have engaged in wrongful trading under section 214 of the Insolvency Act 1986 or fraudulent trading under section 213, this could lead to personal liability for the old company's debts and potentially a disqualification order. It does not automatically prevent you from starting a new company unless a disqualification order or undertaking is in place.

4. Bankruptcy. If you personally were made bankrupt, there are additional restrictions. An undischarged bankrupt cannot act as a director of a company or be involved in the promotion, formation, or management of a company without the permission of the court. Bankruptcy typically lasts 12 months before automatic discharge, but a bankruptcy restrictions order or undertaking can extend these restrictions for up to 15 years.

Practical steps:

1. Check whether you are subject to any disqualification order or undertaking. You can search the public register of disqualified directors on the Companies House or Insolvency Service website.

2. Check whether you are an undischarged bankrupt or subject to a bankruptcy restrictions order.

3. If the old company went into insolvent liquidation, be very careful about the name you choose for the new company to avoid falling foul of section 216.

4. If you are clear of all restrictions, you can simply incorporate a new company at Companies House in the normal way.

5. Consider what went wrong with the old company and whether there are practical lessons to carry forward, particularly around cash flow, credit control, and record keeping.

One final point worth noting is that having a failed company in your history may affect your ability to obtain trade credit, business banking facilities, or certain licences, since credit reference agencies and lenders often check director histories. This is not a legal bar but a practical one.

If you can tell me more about how your old company ended and whether you have received any communications from the Insolvency Service or a liquidator, I can give you a more tailored answer.