In Glint Pay Ltd and others v Jason Daniel Baker and another [2025] EWHC 2166 (Ch), the High Court struck out the Claimants' claim that the appointment of administrators by a floating charge holder was invalid in circumstances where the companies were not insolvent, ruling that an underlying motivation to ultimately acquire the business did not render improper the appointor's enforcement of its charge in accordance with the terms of the charge.
Background
The Claimant companies developed and promoted an app which permits use of a credit card linked to the gold price.
At the relevant time the Claimants were neither balance-sheet insolvent nor failing to pay their debts as they fell due.
Nimoi, a venture capital investment firm, established another company, Niven Alpha Pte Limited (“Niven”), for the purpose of trying to acquire the Claimants. Niven approached the Claimants' board in May 2019 with an offer to purchase 51% of the shares, which the board rejected.
Niven purchased a substantial secured loan to the Claimants from an existing lender, Brahma Finance (BVI) Limited (“Brahma”), which, according to the Claimants, stemmed from Niven's desire to accommodate a hostile takeover of the Claimants.
The benefit of the loan and the security package was transferred to Niven by a Deed of Assignment dated 3 July 2019 (“the Deed of Assignment”) of the rights of Brahma under a £1.65 million secured term loan facility (“the Facility Agreement”) and a guarantee and debenture on 22 January 2019 (“the Guarantee and Debenture”).
The Guarantee and Debenture contained provisions which required the Claimants (as the charger) to provide on request certain information in relation to its assets to and to also notify the charge of claims or potential claims against the secured assets (referred to in the judgment as the "Information Obligations").
Breach of any of the Information Obligations constituted an Event of Default under the Facility Agreement and entitled the lender to accelerate the loan and demand immediate repayment of the amount due.
In July 2019, Niven requested for certain information to be provided by the Claimants. It was not in dispute that no information was ever provided in response to this request.
Following allegation of further breaches in relation to the Claimants' failure to proactively notify the chargee of potential or actual claims and failure to give notice of a board meeting, Niven accelerated the loan and demand payment of all amounts outstanding. The Claimants did not make such payment and Niven appointed administrators pursuant to paragraph 14 of Schedule B1 to the Insolvency Act 1986.
Following their appointment, the Administrators entered into negotiation with Niven for Niven to acquire the Claimants' business. The Claimants' founder, Jason Cozens, raised sufficient funds to repay Niven's loan in full. The Administrators subsequently left office.
The Claimants' claim
The Claimants challenged the appointment of the Administrators on the following grounds:
i. Niven had no right to appoint administrators on the basis that the Deed of Assignment was defective.
ii. The rights assigned under the Deed of Assignment did not include the Information Obligations relied upon.
iii. Niven was obliged to exercise the power to require information for a proper purpose consistently with the objectives of the security (which the Claimants alleged it did not do).
Court's decision
The Court held that the Claimants did not have an arguable case for the following reasons (the list is not exhaustive):
- The Court considered that the Claimants' argument that the benefit of the Guarantee and Debenture was not assigned to Niven was absurd. The Court noted that clause 5 of the Deed of Assignment provided “the parties agree from the Assignment Date the Assignor no longer has any rights in relation to the Debt, the Facility Agreement and/or the Security”. In view of this clause, any rights not transferred to Niven would not have been retained by the transferor but would simply have been extinguished.
- The Court was satisfied that the Claimants' breach failure to furnish information constituted an event in default. The Court held that even if the Claimants were correct on their narrow construction of the relevant clause, they would still have been required to provide some response to the request. By providing no response whatsoever, the Claimants breached their obligations. The Court did not agree that Niven's request for information, the consequent exercise of the right to accelerate, or the consequent appointment of administrators, was invalid.
- The Court concluded that the right of a charge to exercise rights under the charge document is not, and should not be, subject to a Braganza duty. (A 'Braganza duty' derives from the case of Braganza v BP Shipping Ltd [2015] UKSC 17 (18 March 2015) requiring a party with discretionary power to exercise it rationally, reasonably, and in good faith.) A chargee 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.
- In any event the Claimants did not have any real prospect of establishing the existence of a Braganza duty in the context of a contractual right. Even assuming as true all of the propositions put forward by the Claimants as to the intention of Niven as regards the exercise of their powers, the Court did not there to be any real prospect of establishing that that exercise was so improper that it should be struck down by the Court.
In conclusion, the Court ordered that the Claim Form and the Particulars of Claim be struck out on the grounds that they disclosed no reasonable grounds for bringing the claim and the Claimants had no real prospect of succeeding on the claim.
The case highlights the powers conferred under a charge document and the Court's reluctance to depart from the ordinary construction of the wording of the charge. Whilst non-repayment of a loan is the most common form of event of default, it is not the only form. Companies need to carefully assess the default provisions within a charge document and the lender's powers of enforcement in the event of default. In this case, the Claimants' lack of disclosure of requested information (motivated by Niven's desire to acquire the business) was enough to trigger the default provision, resulting in the valid appointment of administrators.
