Introduction

In Glint Pay Ltd & Ors v Baker & Anor [2026] EWCA Civ 1023, the Court of Appeal considered a challenge to the validity of an out-of-court appointment of administrators by the holder of a qualifying floating charge. The appeal arose from a decision of the High Court to strike out the claim on the basis that it had no realistic prospect of success.

The Court allowed the appeal and held that the claim should proceed to trial. While it did not determine whether the appointment was invalid, it found that the claimants had a realistic prospect of advancing their allegation that the appointment had been made for an improper purpose – which, if established, was capable of invalidating the appointment – and that this allegation was not suitable for summary disposal.

Notably, the judgment demonstrates that the existence of a contractual entitlement to appoint administrators may not necessarily be determinative of the validity of the appointment. If it can be shown that the appointing party acted solely for an improper purpose (and therefore not a statutory purpose), it may be possible to invalidate the appointment.

Background

The dispute arose from the administration of the Glint Pay group, a fintech business. Prior to the administration, an offer to acquire a controlling stake in the group had been rejected. Following the failed acquisition attempt, the bidder acquired the group’s secured debt and associated security from the existing lender, including a guarantee and debenture. This factual background formed the foundation of the claimants’ allegation that the subsequent administration appointment was motivated by a desire to obtain control of the business rather than to advance the statutory purpose of the administration.

Following the acquisition of the debt, the new creditor exercised its rights under relevant provisions of the debenture, which required the obligors to provide information concerning the location, condition, use and operation of the secured assets as requested by the lender. Requests were made for, among other things, cash balances, creditor information and details of intercompany arrangements. When that information was not provided, the creditor treated the failure as a breach of the debenture and an event of default under the finance documents. They accelerated the loan and subsequently appointed administrators under the out-of-court procedure available to qualifying floating charge holders under Schedule B1 to the Insolvency Act 1986 (the “IA”).

The administration was short-lived. The group obtained alternative funding, repaid the debt in full and exited administration. The companies subsequently commenced proceedings against the former administrators, alleging that they had never been validly appointed.

Central to the challenge was the allegation that the appointment formed part of a strategy to obtain control of the business following the earlier failed acquisition, rather than to pursue the statutory objectives of administration set out in paragraph 3 of Schedule B1 to the IA. The claimants alleged that the appointor’s objective was not to (1) rescue the company as a going concern, (2) achieve a better result for creditors than would be achieved in a winding up, or (3) realise property for distribution to secured or preferential creditors. Instead, they alleged that the administration process was being used as a means of acquiring the business.

Court’s decision

The Court agreed with the judge at first instance on several important issues. It rejected the claimants’ argument that information request provisions in the debenture were limited in scope and held that the requested information fell within to the scope of provisions in the debenture. Accordingly, the failure to provide that information could constitute a breach of the finance documents and an event of default.

The Court therefore agreed that the creditor had become contractually entitled to enforce its security and appoint administrators.

However, the Court held that this did not necessarily bring the claim to an end. The existence of a contractual entitlement to appoint administrators did not automatically mean that the validity challenge was bound to fail.

The key issue was whether the claimants’ allegation that the appointment had been made for an improper purpose could succeed. Their pleaded case was that the appointor’s objective was to obtain control of the business following its unsuccessful acquisition attempt, rather than to pursue the statutory purposes for which the administration regime exists.

The judge at first instance had concluded that the allegation could not succeed and struck out the claim. The Court of Appeal disagreed, holding that the claimants had a realistic prospect of establishing their case at trial. Importantly, the Court was not tasked with deciding whether those allegations were true. The question on appeal was whether the pleaded case was sufficiently arguable to justify a full trial rather than summary dismissal.

The Court also rejected the respondents’ submission that the appointor’s purpose was irrelevant because administrators act as independent officeholders once appointed. As the Court observed, that argument “confused the likelihood of achieving an improper purpose following appointment, with the existence of that purpose prior to/at the time of appointment”.

The relevant question was whether the power of appointment had been exercised for an improper purpose at the time of appointment. The fact that administrators would subsequently act independently did not necessarily answer that question.

The Court therefore concluded that the claim was unsuitable for summary disposal and should proceed to trial of the underlying factual issues.

Significance of decision

The significance of the decision lies in the Court’s acknowledgment that a challenge to an out-of-court administrator appointment on the grounds of improper purpose (if proven at trial) may be sufficient to invalidate an appointment.

Challenges to administrator appointments traditionally focus on whether the statutory and contractual preconditions for appointment have been satisfied: i.e. whether a qualifying floating charge existed, whether an event of default had occurred and whether the procedural requirements of Schedule B1 had been met. In Glint Pay, the Court accepted that those issues did not necessarily dispose of the pleaded claim. The decision is not authority for the proposition that creditor motive alone will invalidate an appointment, but, rather, it acknowledges that where a credible case is advanced that the appointment power was exercised solely for an improper purpose, the court may be unwilling to challenge summarily without a full examination of the evidence.

Significantly, the Court was unwilling to conclude that a valid event of default and an otherwise lawful entitlement to appoint administrators necessarily defeated the challenge. The claimants’ case that the appointment power had been exercised for a purpose inconsistent with the statutory administration regime warranted examination at trial.

Conclusion

The Court of Appeal’s decision in Glint Pay does not determine the validity of the appointment or whether the appointment was in fact made for an improper purpose, nor does it establish any new rule regarding creditor motives. Rather, it confirms that such allegations may, in appropriate cases, warrant a full trial where the underlying factual issues are genuinely in dispute.

While the ultimate merits of the challenge remain to be determined at trial, Glint Pay serves as a reminder that courts may be prepared to look beyond technical compliance with appointment requirements and examine the purpose for which insolvency powers are exercised. The decision is therefore likely to be of interest to secured lenders, insolvency practitioners and restructuring advisers involved in enforcement planning and administrator appointments. 

¹ Paragraph 67 of judgment: “Neither side was able to point to any authority which had considered the validity of an out of court appointment of administrators in circumstances where the appointor was motivated by an improper purpose. Glint, however, relies on authorities which have established that the appointment of receivers in such circumstances is invalid.”