FAQ's

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Is a Phoenix Company Legal?
A phoenix company is perfectly legal, provided that certain conditions and criteria are met and the appropriate insolvency procedure is followed. The Enterprise Act 2002 and subsequent UK insolvency legislation actively encourage business rescue via a phoenix company, enabling viable businesses to continue trading while shedding historical debt.

Do I Need a Phoenix Company to Carry on Trading?

• In Liquidation or Pre-Pack Administration, a phoenix company is required for the business to continue trading after the insolvent company is closed.
• In a CVA or Debt Management Plan, the existing company remains in existence and can continue trading, with its debts restructured and rescheduled.
   

What is the Timescale for a Phoenix Company?
The timing depends on your company’s circumstances, objectives, and the level of creditor pressure. Typically, a new, debt-free phoenix company can start trading within 3–5 days. In urgent situations, where creditor pressure is high, the business rescue process and transfer of assets can often be completed on the same day.

Will all my company’s liabilities be written off?

• In Liquidation or Pre-Pack Administration, yes—all company debts can be written off. The business can continue trading through a new, debt-free phoenix company.
• In a CVA, the company remains in existence, with typically up to 75% of debts written off, while the remaining 25% is repaid over several years through monthly instalments.
   

How will I know the purchase price of the business and assets?
The acquisition of the business and assets is negotiated and agreed in advance of the formal insolvency process. This ensures you know exactly what you are acquiring and the purchase price before the process begins.

Can I still be a director of a company?
Under the Company Directors Disqualification Act 1986, only rogue directors - those deemed unfit to manage a company - can be disqualified.

• If you have acted reasonably, there is minimal risk of disqualification.
• There is no restriction on being a director of another limited company.
• Restrictions on reusing a company name can be overcome by following the appropriate legal procedures.
   

What are the personal implications for directors?

• Generally, there are little or no personal implications, as company debts are the company’s responsibility. Personal guarantees remain the responsibility of the director who provided them.
• Insolvency does not affect your personal credit rating.
• However, if directors have acted deliberately or negligently, made payments that could be deemed voidable (e.g., dividends or transfers to associated parties), or have an overdrawn director’s loan account, personal liability may arise, and expert advice is strongly recommended before insolvency.