Can I Set Up A New Company After Going Into Liquidation?

Overview Of Can I Set Up A New Company After Liquidating

The answer to the question Can I Set Up A New Company After Going Into Liquidation? is yes you can, provided you are not disqualified from acting as a Director.

It is the Disqualification that prevents a Director from setting up again not the Liquidation. Simply because a company Director has run a company that has gone into Liquidation is not a barrier in itself to setting up a new company.

That is not a test of unfitness.

How Is This Possible To Set Up A New Company?

Directors have duties ie. Director Duties. The Disqualification of a Director is a position that means that a Director is deemed unfit to set up and run a company for a period of time. This is done in effect to protect the public.

When a Director breaches their duty to a company, if the breach is considered sufficiently serious they may find themselves disqualified.

However, Directors can make mistakes and this will not mean that Disqualification is at all inevitable. This point was highlighted in the matter of The Secretary of State for Business, Energy And Industrial Strategy v Lord & Ors [2022] EWHC 21 (Ch):

A disqualification order has serious consequences entailing a substantial interference with the freedom of the individual, sometimes described as penal or “quasi-penal”; the burden of proof lies on the Secretary of State, as claimant. In the present case, I also remind myself of the long passage of time since the material events, of the paucity of relevant documents, and of the consequent significant difficulties of proof. Moreover, the issue is not whether Mr Lord’s conduct was impeccable or exemplary; it is a “value judgment

In other words, perfection is not what is required but more so acting in good faith and with reasonable competence.

When You Cannot Set Up A Company Again

If you have been put into Bankruptcy or if you have been disqualified as a Director then you cannot set up another company and be a Director for the period of time that you are under the disqualification restrictions.

Treading Carefully

Whilst, in theory, you can be a Director of multiple companies that have gone into Liquidation and still set up further companies, it is worth taking professional advice.

The more companies you have controlled and which have ended up in Liquidation, the greater the potential risk of disqualification. This is simply because the Insolvency Service will be more likely to select you for investigation if you have been a Director of multiple companies that have gone into insolvent Liquidation.