Financing an Insolvency Administration when your company continues to trade

 

It is usual for a company to continue to trade while in insolvency administration and the financing of that continued trading is a key issue which should be considered prior to the administrators appointment.

An administrator has the initial cash flow benefit of not having to pay old creditors (as they are "frozen" as a result of the administration order). The administrator is likely however to have cash flow pressures as suppliers to him are likely to request "cash with order".

The preparation of a cash flow forecast for the administration trading period can be seen to be a pre-requisite for a successful administration.

 

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