Kirk Camrass
- Associate
- Contentious Insolvency
English v Secretary of State for Business and Trade
Section 216 Insolvency Act 1986, well known to insolvency professionals,is directed at the phenomenon of what has become known as abusive phoenixism. It limits the abuse by restricting the ability of a director of a liquidating company to be involved in another company using the same name as the liquidating company or a similar one.
There are three “excepted cases” to the generality of the restriction on the use of a prohibited name: the first is where notice is given to creditors of the liquidating company of proposed use of the same or similar name following the purchase by a new company of the whole or substantially the whole of the old company’s business (r 22.4 Insolvency (England and Wales Rules) 2016); the second is where the court gives leave to act as a director the new company (r 22.6); the third allows involvement in a company that was already trading under the same or similar name before the insolvent company entered into liquidation (r 22.7). Breach of the s 216 prohibition can result in personal liability for the debts of the new company as well as criminal sanction. English v Secretary of State for Business and Trade [2026] EWHC 1711 (Admin) is about s 216, r 22.7 and the criminal law.
In August 2000 Brian English incorporated Insignia Blind Co Ltd of which he became a director. The company went into insolvent liquidation in January 2020. Before establishing the company, Mr English had operated as a sole trader, using the trading name Insignia Shade and Shutter Company for some years. The business name and associated logo belonged to him and were never transferred to the company. After the company went into liquidation he continued trading under the name Insignia Shade and Shutter Company and under the similar names Insignia Blind Services and Insignia. The Insolvency Service took the view that that amounted to a breach of s 216(3)(c) Insolvency Act 1986. In spite of warnings, Mr English continued to trade. He was charged, convicted on 21 November 2024, sentenced to a conditional discharge for two years and disqualified from being a director for three years. Mr English appealed, contending that r 22.7 should be interpreted as applying to unincorporated businesses as well as to companies.
Fordham J described the question he had to decide: “Should the third exception within s 216 of the 1986 Act, as set out in r 22.7 of the 2016 Rules, be construed to apply to an unincorporated business (e.g. a sole trader) as well as to incorporated associations?”
Rejecting the appellant’s submissions, Fordham J answered the question in the negative, primarily on the basis that r 22.7 should be given its natural and ordinary meaning, so applied only to companies, not to businesses being carried on other than through a company:
The appeal was dismissed.
In the course of his judgment, Fordham J set out how r 22.7 would have to be read in the light of the submissions made by counsel for the appellant as follows:
“The court’s permission under section 216(3) is not required where the company or business there referred to though known by a prohibited name within the meaning of the section – (a) has been known by that name for the whole of the period of 12 months ending with the day before the liquidating company went into liquidation; and (b) has not at any time in those 12 months been dormant within the meaning of section 1169(1), (2) and (3)(a) of the Companies Act [2006] or in the case of a business has throughout those 12 months been established and trading.”
His rejection of that formulation plainly has civil as well as criminal law implications.
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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