ICAEW.com works better with JavaScript enabled.

Case law: Director ordered to pay £100,000 for continuing to use trading name of former insolvent company

Promoters of a company deciding on a trading name should ensure the name they choose is not a company/trading name previously used by a now insolvent company of which they were a director, or risk a penalty of up to the entire turnover of the new company.

Legal Alert

This update was published in Legal Alert - March 2017

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A limited company had used a particular trading name. When the company went into liquidation, one of its directors set up a new limited company of which he was sole director - then used the same trading name.

It is a criminal offence for a director of a company that has gone into insolvent liquidation to be involved in forming, promoting or managing another business entity that uses the same (or a similar) name as the insolvent company (whether as its registered name or a trading name) in the five-year period after the insolvency. However, there is a defence if they have the court's permission, or certain exceptions apply. The courts can make a confiscation order against anyone who does so.

A confiscation order was made against the sole director of the new company requiring him to pay £100,000 (plus legal costs). When he appealed, the Court of Appeal said:

  • confiscation orders can be made against individuals in these circumstances; and
  • when calculating how much is recoverable, the court can base their calculation on the entire turnover for the entire period when the prohibited name is being used, and not just the net profit during that period.

Operative date

  • Now


  • Promoters of a business deciding on a registered or trading name for it should ensure the name they choose is not a name previously used by a company they were director of, which has gone into insolvent liquidation, or risk a penalty up to the entire turnover of the new business

Case ref: R v Neuberg [2016] EWCA Crim 1927

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.