What is trading administration and how does it work?

Trading administration occurs when the administrator decides to continue operating the business after being appointed. Instead of closing immediately, the company keeps trading to preserve value, maintain customer confidence, and allow time for a sale or restructuring. This approach is common in industries where brand reputation, customer contracts, or ongoing projects are valuable assets that would lose value if trading stopped suddenly. For example, administrators of a retail chain may keep shops open to sell stock and attract buyers for the business. Trading administrations are resource-intensive because the administrator must manage daily operations, including staff, suppliers, and cashflow, while balancing creditor interests. The risk is that ongoing trading could increase losses if sales do not cover costs, but the potential benefit is achieving a better return than liquidation would provide. Trading administration demonstrates the administrator’s flexibility in maximising outcomes for creditors while protecting viable parts of the business.