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.
While the Court supported a broad interpretation of the language used in the information covenants in debentures, it noted that information requests by lenders should be for legitimate commercial aims and also sent a clear warning: appointing administrators for a solely improper purpose may make the appointment vulnerable to challenge.
The background
Glint Pay was a fintech company operating in startup mode. Crucially, prior to acceleration of the debt, it was neither balance-sheet insolvent nor failing to pay debts as they fell due.
Niven Alpha Pte Limited (Niven), a venture capital SPV attempting a hostile takeover, purchased Glint’s secured loan from the existing lender, Brahma Finance. Niven announced to Glint’s shareholders its intention to acquire the business through a pre-pack administration. Now the chargee, Niven exercised its contractual right under the debenture to request certain information from Glint.
Glint failed to provide the information. Niven treated that failure as a non-financial event of default.
Niven promptly accelerated the loan and appointed administrators, with the intention of acquiring the business from the administrators. Glint subsequently challenged the validity of the appointment and sought compensation or damages for trespass on the grounds the administrators were not validly appointed.
Glint argued that:
- there was no event of default as the obligation to provide information only applied to certain asset types and not to all “Secured Assets” as defined in the debenture;
- Niven made the information request in breach of an implied term in the debenture – that the power to request information was exercisable only for legitimate commercial aims; and
- the administrators’ appointment was made in bad faith and for an improper purpose, namely to asset-strip Glint.
The High Court found that:
- there was no arguable case that an event of default had not occurred and rejected the argument that the Secured Assets referred only to the fixed charge assets;
- Niven had not enforced for an improper purpose. While Niven intended to acquire the business from the administrators, appointing an independent office holder to take control of the assets was within a permissible objective;
- the ability of a chargee to exercise rights under a charge document (such as termination or acceleration) is not subject to an implied term that it must be exercised honestly and in good faith. Specifically, the judge rejected the argument of any duty akin to a Braganza duty (Braganza v BP Shipping Ltd [2015] UKSC 17). A chargee is “absolutely entitled to act in accordance with his own interests as he perceives them to be.”
The judge also noted that he had heard arguments based on estoppel but rejected them for the purposes of this application.
Grounds for appeal
Glint appealed on numerous grounds, including that:
- the judge’s interpretation of the Secured Assets was incorrect, and so the conclusion that an event of default had occurred was incorrect;
- that the judge was wrong in concluding that the exercise of the power of appointing the administrators was for a proper purpose and in holding that an implied Braganza-type term did not arise in connection with the exercise of the power of appointment; and
- the judge erred in his decision regarding estoppel.
Broad interpretation of information covenants
The Court of Appeal upheld the High Court’s view that the information request was valid:
- “Secured Assets” does not always refer to all of the assets when the term is used in the debenture. However, the Court saw no reason to limit the term to particular asset types for the purposes of the right to request information about Secured Assets, which included the company’s entire “undertaking” (the subject of the floating charge);
- information regarding cash balances and trade creditors is a clear request for information concerning the condition and operation of that undertaking; and
- although the Court did not need to decide the point, the judge agreed that the information request power was subject to an implied limitation requiring it to be exercised for legitimate commercial aims.
The ‘improper purpose’ trap
The more significant aspect of the ruling for those enforcing security is the Court’s treatment of “improper purpose”. 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.
Contrary to the High Court decision, 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.
Crucially, the Court addressed concerns that allowing the appeal could open the floodgates to setting aside numerous appointments of administrators wherever they formed part of a “loan-to-own” strategy. The Court noted that it was arguably unusual circumstances, in that Glint was solvent before acceleration, and Niven arguably had no genuine purpose to protect its interests as lender or security holder. If correct, those facts were significantly different to a typical loan-to-own strategy used to maximise potential recovery from an insolvent company.
It held that where an appointor has a subjective improper purpose, this could justify the conclusion that the out of court appointment of administrators may be ineffective.
“Pay now, litigate later”
The administrators argued that Glint was estopped from challenging the appointment because it had signed a Waterfall 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.