My Company Is No Longer Viable Because Of Coronavirus. What Can I Do?

company no longer viable because of Coronavirus business closure Covid-19

To say the coronavirus pandemic has had a marked impact on everyday life would be an understatement. The way we shop, socialise, and work has changed radically, and directors may find their company is no longer viable as a result. So, if you’re the director of a company that can’t adapt to the changes, the pandemic has rendered the company insolvent, or you feel now’s the time to get out of your industry, what can you do? 

How Has The Coronavirus Affected Your Company? 

The pandemic’s effects on the economy have been many and varied. As coronavirus took its toll on the world, some companies have seen a boom in demand for their products or services, while others have adapted to the new normal, diversifying into new business opportunities and bringing in additional revenue that has allowed them to continue operating. 

Other businesses have been less fortunate. With lockdowns and subsequent restrictions limiting social contact and even closing certain premises altogether, many businesses, particularly those in the hospitality and events sectors, are finding it hard to stay afloat. For companies struggling before the pandemic, the restrictions and subsequent loss of trade may have proved the final straw. 

While in the UK, the government has provided numerous support schemes to help companies endure the pandemic’s hardships, the lack of trade or the additional expense of adapting to the new normal has proved too much for some businesses. 

What To Do If The Company Is Insolvent 

If your company is one of those the pandemic has negatively impacted, it may be struggling to cover its outgoings. Being unable to repay a company’s liabilities when they fall due is a potential indicator of insolvency. As a company director, you should take action to combat that insolvency as soon as you become aware of the issue. Failing to take appropriate action can make things worse in the long run. In the worst-case scenario, not acting on the signs of insolvency could force the company into compulsory liquidation. 

An insolvent company may not have to close; sometimes, the directors can arrange with the creditors to repay the debts in affordable, monthly instalments through a Company Voluntary Arrangement (CVA). These are formal repayment arrangements that allow the insolvent company to repay what it can afford, writing off any unpaid, unaffordable debt at the end of the arrangement, which usually lasts five years. 

If your company would benefit more from restructuring, then administration may be a better solution. Administration involves putting the company in an administrator’s control, who makes the changes necessary to return the company to a profitable position, making it more attractive to potential buyers. 

Both processes are undertaken by licensed insolvency practitioners. 

What To Do If The Company Is Solvent 

The pandemic has changed more than just the solvent position of many businesses. If you’re a company director, what might once have looked like a viable, profitable company before the pandemic may be less appealing now. Similarly, all the additional hassle involved in making places and staff covid-safe could make company directors decide they no longer want to be a part of that industry. 

If the company is financially solvent, the closure process is different than if it was insolvent. While you can strike the company off the register at Companies House, depending on its circumstances, this may not be the best solution. In this situation, a Members Voluntary Liquidation (MVL) may be the best option. This is a liquidation process for solvent, limited companies with advantages over a simple dissolution. For example, if the company has more than £25,000 in cash and assets, an MVL can be a more tax-efficient way of closing the company. The process can also offer a faster distribution of funds and cash release to shareholders than a dissolution. 

Additionally, MVLs can allow company directors to claim Business Asset Disposal Relief (formerly Entrepreneur’s Relief) up to a lifetime limit of £1 million. Business Asset Disposal Relief lowers the amount of Capital Gains Tax directors are required to pay on the sale of their company and its assets. Like a CVL, Members Voluntary Liquidations must be carried out by licensed and regulated insolvency practitioners. 


Even if a company survives the coronavirus pandemic, its effects on life and how it’s changed the way we work, socialise, and spend means that that company might no longer be viable. If that is the case for you, and your company is struggling to repay its debts when they fall due, you should take immediate action. Depending on your company’s financial circumstances during the Covid-19 pandemic, it may be able to recover from the insolvency, or if not, close in an orderly manner. Similarly, if the company is still financially solvent, as director, you may feel it’s time to close up shop and either start a new company or change careers. Should that be the case, you can apply for a solvent liquidation that may allow you to take advantage of Business Asset Disposal Relief, and pay a smaller amount of Capital Gains Tax on the sale of the company and/or its assets.

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