In this quarter’s update we:
- explore a Court of Appeal ruling on administrator appointments and improper purpose;
- review key updates to LMA finance and sustainability-linked loan documentation;
- examine a High Court decision on valuation challenges and allegations of bias;
- summarise a Court of Appeal judgment on the enforceability of default interest provisions; and
- outline the proposed rollout of the Private Rented Sector Database and its impact on landlords and lenders.
Enforcing security: Court of Appeal warns on ‘improper purpose’ in administrator appointments
The recent Court of Appeal decision in Glint Pay Ltd v Baker [2026] EWCA Civ 1023 is of interest to secured lenders and insolvency practitioners regarding the out-of-court appointment of administrators.
Glint Pay was a fintech startup and was solvent prior to the acceleration of the debt. Niven Alpha Pte Limited (Niven) purchased Glint’s secured loan from the existing lender and exercised its right under the debenture to request certain information from Glint. Glint failed to provide information requested and Niven treated this as an event of default, accelerated the loan and appointed administrators, with the intention of acquiring the business from the administrators.
Glint challenged the validity of the appointment and sought compensation or damages for trespass on the grounds the administrators were not validly appointed, arguing that:
- there was no event of default because the information obligation only applied to certain assets (not to all “Secured Assets”);
- the information request breached an implied term requiring it to be made for legitimate commercial purposes; and
- the administrators’ appointment was made in bad faith and for an improper purpose, namely to asset-strip Glint.
The High Court rejected these arguments, finding that:
- the information obligation applied to all assets and an event of default had occurred;
- Niven had not enforced for an improper purpose - appointing an administrator to take control of the assets was within a permissible objective; and
- the ability of a chargee to exercise rights under a charge document is not subject to an implied term that it must be exercised honestly and in good faith.
Glint appealed, arguing that the judge’s interpretation of the term “Secured Assets” and the conclusion that an event of default had occurred was incorrect, and that the judge was wrong in concluding the exercise of the power of appointing the administrators was for a proper purpose and in holding that there was no duty on Niven to act rationally, honestly and in good faith.
The Court of Appeal upheld the validity of the information request, finding that “Secured Assets” was not limited to particular asset types for the purposes of the information request and included the company’s entire undertaking. The Court further found that information regarding cash balances and trade creditors is a clear request for information concerning the condition and operation of that undertaking. The judge did, however, find that the information request power was subject to an implied limitation requiring it to be exercised for legitimate commercial aims.
Glint argued that Niven’s sole motive was not debt recovery, but a “loan-to-own” strategy designed to asset-strip the business through a pre-pack administration. The Court of Appeal found that there was a realistic prospect of success in arguing that an appointment made for a solely improper purpose is ineffective. However, the Court highlighted that the unusual circumstances of Glint’s solvency before acceleration and that Niven arguably had no genuine purpose to protect its interests as lender or security holder.
The administrators argued that Glint was estopped from challenging the appointment because it had signed an agreement and remuneration letters relating to the administrators’ fees and this amounted to an assumption that the appointment was valid. The Court of Appeal disagreed, finding it arguable that Glint’s actions were a pragmatic “pay now and litigate later” approach to end an unwanted administration quickly while reserving their rights to challenge the validity of the appointment. This, therefore, could not be decided against Glint summarily.
What are the key takeaway points?
- Draft information covenants expressly and broadly, noting that courts will likely view the meaning of the term “undertaking” in financial information covenants as extending to a chargor’s general financial health.
- A “loan-to-own” strategy is not inherently improper, but lenders should be able to show that debt recovery is a genuine purpose of the enforcement.
- Extra caution is required when enforcing against a solvent company based on technical or non-financial defaults, as this invites scrutiny of the lender’s subjective intent.
- The decision arose on a strike-out/ summary judgment application. The Court of Appeal did not finally determine the appointment was invalid, only that Glint had a realistic prospect of establishing that case at trial. Nevertheless, the case serves as a reminder that while the mechanics of appointment may be procedurally correct, the underlying purpose of the enforcement remains subject to scrutiny.
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Enforcing security: Court of Appeal warns on ‘improper purpose’ in administrator appointments
LMA updates Leveraged Finance and Real Estate Finance documents
The Loan Market Association (LMA) has recently made a number of changes to its standard Leveraged Finance and Real Estate Finance documents. The updates were published in August and September 2026 and set out several areas which lenders, borrowers and their legal advisers should be aware of.
On 11 August 2026, the LMA published an updated version of its Real Estate Finance (REF) Facility Agreement for Multi-property Investment Transactions together with various riders.
The amendments to the REF Facility Agreement include updated drafting dealing with extension options and financial covenant cures. The riders include optional provisions dealing with cash traps, interest reserves and minimum credit rating requirements for certain parties involved in a financing, such as account banks, insurers and hedge counterparties. Minor changes have been made to the REF Financial Covenant Cure Rider.
The LMA followed this on 9 September 2026 with an update to its Leveraged Finance documentation, including the Leveraged Senior Multicurrency Term and Revolving Facilities Agreement, Leveraged Financial Covenants and Leveraged Term Sheet. At the same time, the LMA published a revised version of its REF Development Facilities Agreement along with associated documentation, with changes replicating those made in August to the REF Investment Facility Agreement.
One of the main areas of change to the leveraged documentation is the drafting dealing with interest rates. The provisions have been brought more closely into line with the equivalent provisions in the LMA’s investment grade documentation. The revised drafting deals with the position where a reference rate is temporarily unavailable. It includes the incorporation of historic risk-free reference rates as a fallback and the adoption, as standard, of a rate switch from EURIBOR to compounded €STR upon the permanent discontinuation or non-representativeness of EURIBOR.
There have also been changes to the provisions governing ancillary facilities which address administrative issues identified by the facility agent community. These amendments include a requirement for the borrower and relevant lender to provide a prescribed form of notice to the agent both upon the establishment of an ancillary facility and following any change to the details contained in that notice, or upon an unscheduled cancellation of an ancillary facility.
What are the key takeaway points?
- Parties using LMA documentation should check that they are working from the latest version and consider which of the new optional provisions are appropriate for the particular financing.
- Borrowers and lenders may wish to review their precedent documentation to ensure it remains aligned with the latest LMA updates.
- Borrowers and lenders should pay particular attention to the revised reference-rate and fallback wording, especially in Euro facilities.
- For real estate finance transactions, parties should consider at the outset whether financial covenant cures, cash trapping, interest reserves or minimum rating requirements are required and how those provisions should operate commercially.
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High Court – valuation upheld despite accusation of bias
The High Court has held that a valuer, appointed by the majority lenders, was not improperly influenced nor biased when it produced a valuation that caused a cash trap event under a facility agreement.
The financing related to the acquisition of the Tour des Finances in Belgium (the Property). The terms of the amended facilities agreement (AFA) provided for a cash trap event; where the loan to value ratio of the Property went above a defined level, rental income would divert into a cash trap account. The lenders instructed JLL to carry out a valuation of the Property; the result put the loan to value ratio above the relevant threshold, triggering a cash trap event.
The result negatively affected the borrower as the rental income from the Property was diverted. The borrower alleged the valuation had been improperly influenced. It argued that the lenders had extensive involvement in the drafting process; the lenders reviewed several drafts, but the borrower was only given one weekend to comment. According to the borrower, JLL had been improperly influenced by the lenders and had produced an artificially low valuation to trigger the cash trap event and was therefore not a valid “Valuation” under the AFA.
Although the judge criticised some of the valuer’s conduct, it was held that the valuation was produced without actual bias or impropriety and was therefore a Valuation pursuant to the terms of the AFA. The judge accepted that the lenders hoped for a particular outcome, but this alone did not establish impropriety. The judge did, however, note the potential for concerns to arise where a single valuer is appointed by the lenders, and where the borrower and lenders have unequal access to that valuer, given the significant consequences of a valuation. Interestingly, the judge also commented that cash trap provisions could alter the position between borrowers and lenders by causing a focus on short term self-interest rather than the longer-term relationship.
The case confirms that the threshold for successfully challenging a valuation on grounds of bias or lender influence is high; however, it also underscores the risks inherent in valuation mechanisms commonly used in real estate finance transactions.
What are the key takeaway points?
- The threshold for overturning a valuation on grounds of bias is high. A borrower seeking to challenge a valuation must be able to demonstrate actual bias or impropriety. Flaws in the valuation process may be insufficient to challenge the valuation.
- Lenders can legitimately comment on draft valuations, provided they do not seek to dictate the valuation outcome or the independence of the valuer.
- Caution is required when drafting valuation provisions in facility agreements. Attention should be paid to whether significant consequences, such as cash traps, should depend on a single valuation figure, and whether valuation dispute mechanisms may be appropriate.
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Tour des Finances NV GVBF v CBRE Loan Services Ltd [2026] EWHC 2321 (Comm) (8 September 2026)
Court of Appeal confirms default interest clause not a penalty
Further to our previous insight on the High Court’s judgment in Houssein v London Credit Ltd, the Court of Appeal has now upheld a ruling that a contractual term entitling a lender to charge default interest was enforceable and did not constitute a penalty.
As discussed in our previous insight, the dispute arose from a loan facility under which interest increased from 1% per month to a default rate of 4% per month compounded monthly following an event of default. In the first High Court trial, the judge found that the default rate was an unenforceable penalty. The lender applied to the Court of Appeal, which held that the High Court judge had failed to correctly apply the test for a penalty, as set out in Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67. Amongst other things, the High Court had failed to consider whether the default rate was high enough to be considered “extortionate, extravagant or unconscionable”. The Court of Appeal returned the case to the High Court to consider this point.
On reconsidering the question at the second High Court hearing, the judge found that the default rate was not in fact a penalty. The judge considered whether the default rate was extortionate not only by reference to the lender’s legitimate interest in repayment, but also by reference to the lender’s legitimate interest in all the primary obligations protected by the default interest provisions. The judge grouped the events of default into categories of primary obligations and ultimately found that the lender had a legitimate interest in enforcing each category. The judge then considered whether the default rate was extortionate and said that expert evidence had shown that while the default rate was above average it was not extortionate, as even a small shift in the borrower’s credit risk would impact the ability to refinance the loan, which would have been necessary for the lender to be repaid here.
The borrower appealed against the High Court’s decision, arguing (amongst other things) that the test established in Cavendish had been misapplied by the High Court, as events which post-dated the loan were taken into consideration, rather than making an assessment at the date of the contract. The borrower also contended that the lender’s credit risk interests were already sufficiently protected and therefore did not need a default interest rate compounded monthly.
Dismissing the appeal on all grounds, the Court of Appeal held that the High Court had correctly applied the test in Cavendish to the facts of the case. The Court of Appeal approved the judge’s approach that the assessment of whether the default rate is out of proportion must be undertaken as at the date the agreement was entered into and not by reference to later events. The Court of Appeal accepted that a reasonable lender would have regarded the refinancing risk as sufficiently significant to justify an above-market default interest rate following an event of default.
The Court also rejected the argument that the lender’s legitimate interests were “adequately” protected as this would revive the pre-Cavendish “pre-estimate of loss” test. Instead, the Court considered whether the default interest rate was out of all proportion to the lender’s legitimate interest in protecting its credit risk. Here, the Court held that the default rate was not out of proportion to the lender’s legitimate credit risk interest.
What are the key takeaway points?
- Default interest rates may exceed ordinary market rates where they protect a legitimate lender interest, including increased credit risk and the risk that a borrower’s default could jeopardise a planned refinancing.
- The key issue remains one of proportionality. A default rate will be unenforceable if it is out of all proportion to the lender’s legitimate interest in enforcing the borrower’s obligations.
- The assessment of whether the default rate is out of proportion must be undertaken as at the date the agreement was entered into and not with the benefit of hindsight by reference to later events.
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Houssein v London Credit Ltd [2026] EWCA Civ 830 (1 July 2026)
LMA: updated model provisions for sustainability-linked loans
On 18 August 2026, the Loan Market Association (LMA) published updated draft provisions for sustainability-linked loans (SLLs), together with a model term sheet and an educational note.
The revised documents reflect changes in market practice since LMA’s original provisions were published in May 2023. They provide clearer drafting around sustainability reporting, amendments, margin adjustments and circumstances in which a loan should no longer be treated as sustainability-linked.
The update also introduces drafting for “sleeping” SLLs, which is intended for transactions where the parties want a loan to become sustainability-linked but are not ready to agree all the sustainability terms when the facility is first signed. The provisions provide a framework for those terms to be agreed and brought into effect later.
The accompanying educational note explains the purpose and operation of contractual control mechanisms contained in the SLL Provisions. They include sustainability breach, amendment and declassification provisions, which are intended to preserve the integrity of SLLs.
The LMA has also published a mark-up of the SLL provisions, showing the changes made since May 2023. The documents are available on the LMA website.
What are the key takeaway points?
- Borrowers and lenders should check that they are using the latest LMA drafting, although noting that the SLL provisions are non-binding and are intended to provide a starting point for negotiation.
- Sleeping SLL provisions offer more flexibility where sustainability terms cannot be finalised at the outset.
- Reporting, verification and any later changes to sustainability targets should be considered carefully so that the sustainability-linked status of the loan remains appropriate.
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Renters’ Rights Act 2025: confirmation of the PRS Database rollout and reforms to rent disputes
On 9 September 2026, the government announced further details of the implementation of the Renters’ Rights Act 2025 (RRA 2025), which will require landlords of assured or regulated tenancies in England to register themselves and their properties through the Private Rented Sector (PRS) Database, also known as the “Register your Rental Property” service.
The draft Private Rented Sector Database Regulations 2026 have now been laid before Parliament, confirming that the service is intended to be rolled out on a phased basis. The service will go live on 15 December 2026 in the West Midlands, before being applied to other regions over the following 12 months. Only landlords with properties in a specified region which are actively let or become let during rollout will initially be required to register. As part of this process, information such as any house in multiple occupation (HMO) licence requirements, and relevant gas, electrical and energy performance certificates, must be provided. Those who fail to register within the three-month window period will face sanctions for non-compliance.
Further legislation will come into force in which landlords will also be obliged to register any unoccupied properties before they are marketed for let. Such registration numbers will need to be included on adverts by letting agents and landlords, however further guidance on these requirements is yet to follow.
The PRS Database Regulations 2026 provide the framework for the operation of the database, including:
- Regulations 4, 5 and 6 and Schedules 2 and 3: requirements relating to landlord and dwelling entries.
- Regulations 7, 8 and 9: requirements for updating such entries.
- Regulation 10: the renewal of active entries.
- Regulations 11 and 12: circumstances in which entries become inactive and the process of reactivation.
- Regulation 13: the verification, correction, or removal of entries.
- Regulation 14: the delegation of the setting of fees in relation to creation, renewal or reactivation of entries.
The announcement further confirmed that HM Revenue and Customs’ Valuation Office will be responsible for decisions on challenges to rent increases in England, as part of efforts to streamline the resolution of rent disputes. Until this new system is implemented, those wishing to challenge a rent increase must continue to apply to the First-tier Tribunal (Property Chamber).
What are the key takeaways?
- Landlords should prepare for mandatory registration on the PRS Database as the phased rollout begins. Lenders to residential landlords may require evidence of such registration as a condition precedent.
- Non-compliance with registration may result in sanctions for landlords, and in the future registration will be required for vacant properties before they are marketed for let.
- Compliance with laws undertakings in finance documents should capture this requirement.
- Lenders may want to check that loan documentation includes a ‘notices’ undertaking that requires notification to the lender of any application, requirement, order or notice served or given by any public or local authority, to catch any notice or relevant correspondence regarding the PRS database.
Find out more
MHCLG: Stronger protections and greater confidence for renters (9 September 2026)
Gov.UK Campaign: Housing Hub: Get ready: “Register your rental property” service
The Private Rented Sector Database Regulations 2026
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