Sopwith/Hawkers
 

I've read about Harry Hawker set up a new company to take over Sopwith's factory and with Tom Sopwith as part of the new company, but I can't figure out why.

Did Sopwith actually go bust?

Sopwiths
 

Hi: Basically, yes they did go bust. After the First World War, the Company tried to diversify and enter non aviation markets, but without any real success. The final downfall occured when the Government of the day tried to get the Company to pay back money it had made during the wartime period, from its manufacture of aircraft.
In 1920 Sopwiths went into liquidation. Almost immediately though, Tom Sopwith and Harry Hawker started up another aviation company, the new concern being named Hawker Aviation.....

It was set up as H G Hawker Engineering Ltd but was never owned by Hawker, it was still basically the same Sopwith company, but took the name of Sopwith's test pilot to avoid having to pay crippling taxes on the former company's war profits. Just imagine if we'd had the Sopwith Hurricane, or Sopwith Harrier :)

Not only Sopwith: Avro to Crossley, Airco to BSA, and widely in non-aero. In 1919 the issue of "merchants of death", the reward contrast between those that had made and those that had used munitions, caused a political need for a windfall tax. Overnight restructuring was a response, like a Small Works Builder liquidating to frustrate creditors. The lesson was learned by Treasury and for the Second time around UK had (from March,1939, Armament Profits Duty, then for any business, not just Munitions) Excess Profits Tax, designed to hold firms' profit-on-capital employed at some semblance of pre-War norm. From Sept.1941 it confiscated 80% of the excess of 7.5% on shareholders’ funds. Firms still folded (Cierva, Cunliffe-Owen, General, Miles, Parnall), unable to carve out civil work, but did not restructure to shelter past profits.