Every trading administration begins with the same question: can this business keep operating, and should it? It is usually discussed as a funding question — is there enough cash, will the secured creditor support it, what is the downside exposure. Those matter, but they are downstream of something more basic. Trading on is only viable if the operation can actually be run, safely and lawfully, by people who are still there or can be put in place quickly. That is an operational test, and it is the one most often assessed last.
The first test is management continuity. When directors resign or step back on appointment, the question is not whether the company has an org chart but whether anyone left in the building has the authority and experience to make decisions. In a single-site business the departure of one owner-operator can remove the only person who knows the supplier terms, the licence conditions, the alarm codes and the rota logic. In a multi-site group, regional managers often remain but have never had to operate without a head office. If no one can credibly hold the management position from day one, trading on is not a plan — it is a hope. This is precisely the gap an interim manager fills, and it is a different role from the office holder's.
The second test is whether the operation is legally able to open tomorrow. Premises licences, personal licence holders on shift, food hygiene registrations, gas and electrical certification, lift inspections, fire risk assessments, insurance conditions and, in regulated environments, sector-specific permissions. Any one of these lapsing can close a site instantly, and several of them are commonly tied to individuals who have just left. An honest pre-trading assessment catalogues what is required to keep each site lawfully open and who currently holds it. Where cover is missing, it either gets replaced within days or that site does not trade.
The third test is supply. Most operating businesses depend on a small number of critical suppliers who cannot be substituted quickly — a food distributor, a linen contractor, a card acquirer, a booking platform, a payroll bureau, a utility on a commercial contract. On appointment these counterparties immediately reassess their risk, and several will demand pro-forma terms, deposits or personal assurance. Trading on requires knowing, before the decision is made, which supplies are single-sourced, what post-appointment terms are realistically obtainable and what the cash consequence of moving to pro-forma actually is. Practical work on this sits in supplier management and starts on day one, not week three.
The fourth test is labour. A trading operation lives or dies on whether staff turn up. After an appointment, the people most likely to leave are the ones the operation can least afford to lose: the head chef, the duty managers, the maintenance engineer, the person who has run the stockroom for eleven years. Retention in that window is not achieved with money, which is rarely available — it is achieved with clear, honest, in-person communication and a visible, competent manager on site. Where cover is thin, agency use spikes and labour cost can rise well beyond forecast within a fortnight, which is why payroll and labour controls belong in the trading decision, not just in the reporting that follows it.
The fifth test is cash mechanics rather than cash quantum. It is not enough to know that the business takes money; the office holder needs to know how it takes money, where it lands, and how quickly it can be redirected. Card acquirers frequently withhold settlement or impose rolling reserves on notice of insolvency. Booking platforms hold customer deposits. Landlord concessions, deposits and rent deposit deeds affect what is genuinely available. Trading forecasts built on historic takings without checking settlement mechanics are the single most common reason a trading period runs out of cash faster than modelled.
The sixth test is whether trading preserves value or merely defers a loss. Trading on is justified when it protects goodwill, keeps a saleable business intact, preserves employment, allows a marketing period, or realises stock and work in progress at better than break-up value. It is not justified when it simply funds losses while the same outcome arrives later with a larger post-appointment liability. The distinction usually turns on whether there is a credible buyer universe and whether the operation can be presented to that universe as functioning. A demoralised, half-staffed site with lapsed compliance is worth substantially less than the same site trading properly, which is why operational quality during the marketing period is a value question, not a housekeeping one.
Once those tests are worked through, the answer is often nuanced rather than binary. In a multi-site group the realistic outcome is frequently that some sites trade, some close immediately and some trade for a defined window to clear stock or honour forward bookings. That mixed answer is usually the value-maximising one, but it is also the hardest to execute, because it requires simultaneous management of ongoing operations and orderly site closures without letting either damage the other.
Whatever the decision, it should be documented with the evidence behind it. Office holders are judged later on the reasonableness of the decision at the time it was made, and a short written operational assessment — sites, licences, key people, critical suppliers, cash mechanics, weekly cost of trading — is the record that supports it. It also becomes the operating plan for whoever is put in to run the business.
The practical conclusion is that the trading decision should not be made before someone with operating experience has walked the sites. A day spent on the ground before committing routinely changes the answer, and almost always changes the plan. AJS carries out that assessment for insolvency practitioners and administrators, and where the answer is to trade, puts the operational management in place to do it.