The recent High Court decision in Glint Pay Ltd v Baker & Ors [2025] EWHC 2166 (Ch), handed down by Mr Simon Gleeson (sitting as a Deputy High Court Judge), offers a timely reminder of the commercial realities and legal boundaries surrounding the appointment of administrators by secured creditors, particularly in the context of tech startups and venture capital.

 

Background: A Familiar Playbook, Unusual Facts

Glint Pay, a fintech startup enabling gold-backed payments, found itself the target of a hostile takeover. The would-be acquirer, Niven Alpha, purchased Glint’s secured debt from a third-party lender and promptly called a default.  That default was based not on insolvency, but on alleged breaches of non-financial covenants (specifically, information provision obligations). Administrators were appointed, but Glint’s shareholders raised fresh capital, refinanced the debt, and ultimately regained control after a short administration.

The subsequent litigation was brought by Glint and its subsidiaries against the administrators, challenging the validity of their appointment and seeking compensation for alleged intermeddling.

 

Key Issues Before the Court

The claimants advanced three main arguments:

• Defective Assignment: That the rights to appoint administrators were not validly assigned to Niven.
• Scope of Rights: That the information obligations breached did not trigger a valid event of default.
• Improper Purpose: That the chargee’s powers were exercised for a collateral, improper purpose; namely, facilitating a takeover rather than debt recovery.

The administrators sought to strike out the claim, arguing that none of these grounds were realistically arguable.

 

The Judgment: Substance Over Form

Assignment of Rights

The court robustly rejected the argument that the assignment was defective.

“The Defendants submit that this argument [the Claimants literal and textual reading of the assignment clause] is absurd, and I agree.”

And if you thought the judge wasn’t holding back with that comment, he followed it up with:

“The proposition that the benefit of the Information Obligations was not transferred to Niven by the Deed of Assignment does not rise even to the level of arguability. I therefore proceed on the basis that the effect of the Deed of Assignment was that the Information Obligations were owed to Niven after the assignment took effect.”

The Deed of Assignment transferred all relevant rights, including the information obligations, to Niven. The judge was clearly unimpressed by the claimants’ “literal” reading of the assignment clause and found it commercially and legally unsustainable.

 

Event of Default

The failure to respond to a valid request for information did constitute an event of default under the facility agreement.

The claimants had advanced a number of arguments in support of their challenge to the existence of an event of default.  Those arguments were found by the judge to be overly technical and unconvincing.

The claimants had argued that the form of the request for information was ineffective, but the court found that:

“There can have been no doubt in the mind of either the sender or the recipient of the e-mail as to what was being requested, the basis of the request, or that the request was being made on behalf of Niven. Detailed textual exegesis of e-mail signatures and addresses is simply not an appropriate basis for the analysis of commercial transactions.”

The claimants also argued that the scope of the information sought had to be confined to the location, condition, use and operation of specific secured assets.  Again, the judge found this argument unconvincing:

“I am therefore satisfied that there is no valid basis for the argument that the use of the words “location, condition, use and operation” in clause 1.11.1 implies any reduction in its scope to only physical assets and, again, I do not think that this proposition rises even the level of arguability.”

The judge also dismissed, as “an error of law”, the claimants’ argument that the assets subject to a floating charge are not appropriated to the charge until it crystallises.

A previous decision in the House of Lords in In re Spectrum Plus Ltd [2005] UKHL 41 which the judge cites with approval:

“Under a floating charge… the chargee does not have the same power to control the security for its own benefit. The chargee has a proprietary interest, but its interest is in a fund of circulating capital.”

 

Proper Purpose & Braganza Duty

Perhaps most interestingly, the court also addressed whether the chargee’s powers were exercised for a “proper purpose.”

While English law requires that a mortgagee or chargee act in good faith and for the purpose of debt recovery, the judge found that Niven’s actions, though likely very clearly motivated by a desire to acquire the business, were not improper. The appointment of administrators to enable an independent sale process was within the legitimate scope of the chargee’s powers.

The court also declined to imply a “Braganza” (per Braganza v BP Shipping Ltd [2015] UKSC 17) duty of good faith or rationality into the chargee’s contractual rights, distinguishing between discretionary powers and unilateral rights under security documents:

“My conclusion is that the right of a chargee to exercise rights under the charge document is not, and should not be, subject to a Braganza duty. In my view, a charge exercising a right under the charge document is in the same position as a lender exercising a right to terminate under a loan document – he is absolutely entitled to act in accordance with his own interests as he perceives them to be, and a man is not to be subject to any requirement of rationality in pursuing his own interest for his own account.”

 

Estoppel

Finally, the judge held that Glint was estopped from challenging the administrators’ appointment, having previously recognised the validity of that appointment in an agreement with the administrators the effect of which was to agree the administrators’ prompt vacation of office with the question of the administrators’ fees to be determined by a subsequent court application.

 

Commercial and Legal Takeaways

Strategic Use of Security Rights: The case illustrates how secured creditors can leverage non-financial covenants and default events to pursue commercial objectives, including takeovers, even where the debtor is not insolvent.

Limits of “Improper Purpose”: The judgment clarifies that a chargee’s collateral motives do not necessarily invalidate enforcement actions, provided the statutory and contractual framework is respected.

Braganza Duties and Security Enforcement: The decision reinforces the reluctance of English courts to imply Braganza-style duties into security enforcement, preserving the autonomy of lenders in exercising their rights.

 

For legal guidance and advice regarding Financial Law queries, please contact Fearghal O’Loan or a member of our Finance team for more information.

While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.