Phoenix companies

In life sometimes people just don’t get things right the first time. Businesses fail for many different reasons and honest and hard working entrepreneurs should be given a second chance to get things right.

What is a phoenix?

A phoenix is a multi coloured fictional bird. Near the end of the birds life it builds itself a nest of twigs that then ignites; both nest and bird burn fiercely and are reduced to ashes, from which a new, young phoenix or phoenix egg arises, reborn anew to live again.

What is a phoenix company?

A phoenix company is where the assets of a company are moved to another company allowing the core business and allowing the same company owners to continue the business operations.

A phoenix company allows a businessman or businesswoman a second change to start again and for the profitable elements of the failed business to survive. A phoenix company also has advantages that allow continuity for both suppliers and employees.

Is it legal to set up a phoenix company?

Yes, as long as it is done legally and does not breach any company laws such as:

• Directors disqualification law
• Bankruptcy and Insolvency law
• Company laws
• Assets must not be transferred at undervalue.
• Company and trading names must comply with S.216 / 217 of the Insolvency Act 1986.

Common methods used to set up a phoenix company:

Prepack Administration

Where an insolvent company uses a Company Administration Order which includes the pre-packaged sale of the assets, goodwill and business of the company

Creditors Voluntary Liquidation

Where a new company is set up following the insolvency liquidation of a company. The new company buys some assets, goodwill, trading name for market price from the liquidators. The new company can therefore begin from scratch.