Can a company in administration still trade?

The first objective the law sets an administrator is to rescue the company as a going concern. Even where full rescue isn't possible, a business that's still trading, with live contracts, paying customers and a working team, sells for far more than its bare assets would fetch in a closure. So administrators very often trade the business on while they market it for sale or work up a rescue.

That's why you'll see well-known names continue serving customers for weeks or months “in administration”. The trading is deliberate, and it's protected by the moratorium that stops creditors disrupting the company while the administrator works.

The administrator does. The directors stay in office but can't manage the business without the administrator's consent, and the administrator runs it in the interests of creditors as a whole. Day-to-day, the same managers and staff may be operating things, but the big decisions (what to keep selling, which contracts to honour, whether to accept your order) sit with the administrator.

For more on what the process is and why it happens, see what “in administration” means.

Trading continues, but the safety of your position changes:

• Buying from them? Goods or services you pay for and receive now are generally fine. The risk sits with money paid in advance (deposits, pre-orders, gift cards) which can become an unsecured claim if the business is later wound down.
• Supplying them? Don't keep supplying on the old credit terms on trust. Get the administrator to confirm in writing that ongoing supply will be paid as an expense of the administration. The creditor checklist sets out exactly what to confirm first.
• Owed money from before? That debt is now a claim in the administration. Where it ranks decides how much you'll see. See the order in which debts are paid.

Not every administration trades on to a rescue. If no buyer emerges and the business is loss-making, the administrator may switch to a controlled wind-down: selling stock and assets, fulfilling what's practical, and closing the operation. The company then typically moves into liquidation or is dissolved. The clearest signal of which way things are going is the administrator's proposals, filed within eight weeks of appointment, covered in how long administration takes.

Can a company in administration still take my order?

It can, if the administrator decides to keep trading that part of the business. Whether an individual order is honoured is the administrator's call, made in the interests of creditors. New orders placed after the appointment are handled on the administrator's terms, often cash on delivery or pro forma rather than on credit.

Will my warranty or deposit be honoured?

It depends. If the business is sold as a going concern, a buyer may choose to honour existing warranties and deposits, but isn't always obliged to. If the company is wound down, a pre-appointment deposit usually becomes an unsecured claim, which typically recovers very little. Gift cards and deposits are a common casualty of retail administrations.

Should I keep supplying a customer that's in administration?

Only on terms you've agreed in writing with the administrator. Supply made after the appointment can be paid as an expense of the administration if the administrator agrees, but without that written commitment it becomes another unsecured claim. The creditor checklist covers exactly what to confirm before you ship anything new.

Is my money safe if I pay a company in administration now?

Money you pay for goods or services delivered now is generally fine, because you get what you pay for. The risk is money already owed to you, or paid in advance for something not yet delivered: those become claims in the administration. Pay for value received, not on account.

Can a company come out of administration and carry on?

Yes. Administration's first objective is to rescue the company as a going concern. A company can exit administration and continue trading, be sold to a new owner who continues the business, or agree a Company Voluntary Arrangement with creditors. Not every administration ends in closure.