What are phoenix companies? - Company Rescue

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What are 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.


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