作者

Christian Wiltshire

高级律师

伦敦

Information covenants and enforcement rights: lessons from Glint Pay Ltd v Baker

Briefing

Summary

A firm of administrators has successfully obtained summary judgment in the High Court dismissing a challenge to the validity of their appointment.

The August 2025 judgment in Glint Pay Ltd & Ors v Baker & Anor [2025] EWHC 2166 (Ch) provides secured lenders with important guidance on the purposes for which an administrator can be appointed and serves as a stark reminder to borrowers that failure to comply with routine information undertakings can trigger enforcement action - even where the company is solvent and trading, and even where the appointing creditor's ultimate objective is to acquire the business from the administrator as part of a hostile takeover strategy.

Background

The company and financing structure

Glint Pay Ltd (together with its subsidiaries, Glint) was an early-stage fintech start-up which, like most such companies, had primary assets consisting of proprietary software and was loss-making, albeit solvent on both a balance sheet and cash flow basis.

Glint had entered into a £1.65 million secured term loan facility agreement (the Facility Agreement) provided by Brahma Finance (BVI) Limited (Brahma), secured by a guarantee and a debenture (the Debenture).

Takeover bid and debt assignment

Niven Alpha Pte Limited (Niven), a special purpose vehicle incorporated by a venture capital investment firm, sought to acquire 51% of Glint's shares in May 2019. When Glint's board rejected this approach, Niven acquired the debt owing to Brahma. The court accepted Glint's contention - described as "almost certainly correct" - that Niven acquired the loan as a platform for a hostile takeover. The benefit of the Facility Agreement and the Debenture was transferred to Niven by a deed of assignment dated 3 July 2019 (the Deed of Assignment).

The path to administration

The Debenture contained information covenants requiring Glint to provide information about charged assets upon request and to notify the chargee of claims against the secured assets (the Information Obligations). Any breach of the Information Obligations constituted an Event of Default under the Facility Agreement, entitling the lender to accelerate the loan and demand immediate repayment.

On 15 July 2019, Niven requested certain information including minutes of board meetings, monthly cash balances and a list of creditors. It was common ground that Glint provided no information in response.

On 30 August 2019, Niven's solicitors alleged breach of the Information Obligations. Glint's solicitors responded on 4 September 2019, alleging that Niven was abusing the Finance Documents for a collateral purpose in bad faith with a view to disrupting the business and to place it under onerous commercial pressure. On the same date, certain individuals connected with Niven gave a presentation to some of Glint's shareholders in an unsuccessful attempt to obtain support for Niven’s attempted takeover.

On 6 September 2019, Niven's solicitors alleged further breaches and Niven accelerated the loan and demanded repayment. When Glint failed to pay, this constituted a further Event of Default.

Niven appointed administrators of Glint on 18 September 2019 using the out-of-court appointment procedure pursuant to paragraph 14 of Schedule B1 to the Insolvency Act 1986.

Repayment

The administrators entered into negotiations with Niven regarding acquisition of the business. However, Glint's founder raised sufficient funds to repay Niven in full, with payment made on 7 October 2019 and a deed of release executed shortly thereafter. The parties entered into a settlement agreement (the Waterfall Agreement) on 19 November 2019 providing for the administrators to cease their appointment and for an application to court for determination of the administrators' remuneration and expenses.

Challenge

Glint subsequently challenged the validity of the administrators' appointment with the court noting that if the administrators were not validly appointed, they would constitute "illegitimate intermeddlers with the property of the companies and may be liable to compensate [Glint] for their actions". It was common ground that if the administrators were validly appointed, Glint's claim would fail.

Niven was not party to the proceedings (in its capacity as appointing creditor) as the proposed acquisition vehicle had been wound up by the time proceedings were issued.

Glint mounted three principal challenges:

the assignment under the Deed of Assignment was defective, such that Niven had no right to appoint administrators
the assigned rights did not include the rights Niven purported to exercise, such that Glint's failure to respond did not constitute an Event of Default
Niven exercised its powers for an improper purpose inconsistent with the objectives of the security.

Challenge one: defective assignment

Glint argued that the Deed of Assignment transferred only the bare equitable proprietary right in the collateral, not the benefit of the Information Obligations themselves. The basis for this argument was that there is a difference between the bare security interest in property and the bundle of contractual rights which a security agreement gives the secured creditor.

The court rejected this argument on two grounds:

the Deed of Assignment contained customary language providing that the assignor no longer had any interest in the Finance Documents. Glint's interpretation would mean rights not transferred to Niven would simply be extinguished. The court could not identify any commercially rational scenario for this interpretation
where a security interest is created by agreement, rights granted to the secured party are inherent in the security interest itself. A grant of security is a grant of an equitable property interest, and the rights associated with that property interest are proprietary, not contractual. A transfer of that property interest takes with it the rights incidental to it.

The court concluded that the proposition that the Information Obligations were not transferred did not rise even to the level of arguability.

Challenge two: scope of information obligations

Glint argued that the Information Obligations only required it to provide information about real property or fixed assets secured by the Debenture, not the business generally.

The covenant required Glint to provide information concerning "the location, condition, use and operation of the Secured Assets as the Lender may require", with "Secured Assets" defined as "all the assets, property and undertaking for the time being of the Obligors subject to the Security…".

Glint argued that by necessary implication, this reference must be to only those secured assets which could be said to have a "location, condition, use and operation" - ie fixed assets only.

The court found this argument made no commercial sense. The Debenture included a floating charge over all of Glint's assets. The court considered it "entirely clear" that when the scope of the charge was expanded to include a floating charge, the lender's information rights would expand correspondingly. It would be "positively perverse" to argue that a lender under a floating charge would not have intended information rights regarding all assets and liabilities which together constitute the security - the net value of the company.

This was one of a number of points raised in respect of the construction of the documents. The court noted that where an agreement is reached between two parties and then transferred to a third, a question of the original intentions of the parties may arise as between the obligor and the transferee. The general rule as established in Cherry Tree Investments v Landmain Ch 305 is that background knowledge available to all parties is admissible evidence in construing a commercial contract, but its role is very limited in circumstances where the document in question is assignable and publicly available (or where third parties will or may rely upon it).

The court therefore found that the negotiating background between Glint and Brahma was of no assistance in construing the Debenture given that: (a) the Debenture was executed as a deed; (b) it was publicly available at Companies House; and (c) the Finance Documents were expressed to be assignable.

The court found that Glint's failure to provide any information in response to Niven's request constituted a breach and an Event of Default.

Challenge three: improper purpose and the Braganza duty

The proper purpose argument

Glint argued that Niven's purpose in exercising its powers was collateral and improper. The purpose of the information request was to secure an Event of Default, which would enable acceleration, which would enable appointment of administrators, which would enable Niven to acquire the business at a lower price than shareholders would accept. Therefore, Glint argued, the purpose was illegitimate.

It is an established principle that a chargee can only exercise powers under a charge for a purpose which is proper to that charge. In Quennell v Maltby 1 WLR 318, Denning MR stated that equity would restrain a mortgagee from exercising rights for an improper purpose.

In Downsview Nominees Ltd v First City Corp UKPC 34, Lord Templeman established two rules: first, that powers conferred on a mortgagee must be exercised in good faith for the purpose of obtaining repayment and secondly that, subject to the first rule, powers may be exercised although the consequences may be disadvantageous to the borrower.

The court referred to Re Aartee Bright Bar Ltd (in Administration) EWHC 606 (Ch), where HHJ Stephen Davies held that it could not be said that the only proper purpose for appointing an administrator is to obtain repayment. The appointor could be motivated by the belief that administration would achieve the statutory purpose, or by a desire to improve the position of creditors generally, or "to enable an independent office holder to take control of the assets".

The court concluded that Niven's objectives fell clearly into this category - "to enable an independent office holder to take control of the assets". Whilst accepting that Niven wanted such an independent officer appointed in order to acquire the business from that officer, the court did not consider that motivation rendered the exercise of the chargee's rights improper.

Braganza duty

Glint also argued that the words "as the Lender may require" imported a discretion and sought to rely on the principle in Braganza v BP Shipping Ltd UKSC 17 that where a contract gives one party a discretionary power, there may be an implied term that the discretion must not be abused but exercised honestly and in good faith.

This is an exception to the general rule stated by Lord Reid in White & Carter (Councils) Limited v McGregor AC 413 that "it has never been the law that a person is only entitled to enforce his contractual rights in a reasonable way and that a court will not support an attempt to enforce them in an unreasonable way".

In Cathay Pacific Airways Limited v Lufthansa Technik AG EWHC 1789 (Ch), John Kimbell KC approved as correct the position at law as set out by Chief Master Marsh and others in UBS AG v Rose Capital Ventures Ltd EWHC 3137 which can be summarised as:

not every contractual power will be subject to a Braganza limitation
the types of decisions amenable to a Braganza term are those affecting both parties' rights where the decision-maker has a clear conflict of interest
it is more likely for a Braganza term to be implied in employment contracts than in less 'relational' contracts such as mortgages
the scope of any implied term will vary according to circumstances.

In this case the court dismissed that such a term should be implied and held that:

"the right of a chargee to exercise rights under the charge document is not, and should not be, subject to a Braganza duty…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".

Conclusion

The court granted summary judgment in favour of the administrators, striking out Glint's claim in its entirety on the grounds that it disclosed no reasonable grounds for bringing the action and had no real prospect of success.

Glint's position had been complicated by the recitals and acknowledgements accepted in the Waterfall Agreement as to the appointment of the administrators. This was the basis for an estoppel defence raised on behalf of the administrators, though the court ultimately determined the validity of the appointment on substantive grounds, finding that all three challenges to the validity of the appointment failed to reach even an arguable threshold.

Key takeaways

This case confirms that acquiring debt with the intention of facilitating a hostile takeover through enforcement mechanisms is not, in and of itself, an improper purpose. The court accepted - "almost certainly correctly" - that Niven acquired the loan as a platform for hostile takeover, yet held that enabling an independent office holder to take control of the assets was a proper purpose even where the appointor's ultimate motivation was to acquire the business from that officer at a discounted price rather than to secure repayment of its debt.
Prior to initiating any enforcement steps or accepting any appointment in connection with such enforcement, lenders and insolvency practitioners respectively should seek specialist restructuring advice to ensure appointments are valid and to mitigate the risk of any subsequent challenge and potential liability as "illegitimate intermeddlers with the property of the companies".
Where a document is assignable and publicly available (or where third parties will or may rely on it) a subjective review of the intentions of the parties' original intentions is likely to have a very limited role. The court exercised this approach in respect of the security in this case which was assignable and had been mandatorily registered at Companies House. This reinforces the importance of ensuring that documents accurately reflect the parties' intentions at the documentation stage.
Borrowers should, at documentation stage, carefully review all covenants and undertakings, including those in documents ancillary to the loan agreement such as security documents and seek advice on potential areas for negotiation.
Borrowers should familiarise themselves with the circumstances in which any debt can be transferred, consider the potential consequences of facing a different counterparty with fundamentally different commercial objectives governed by the same contractual terms and seek advice on potential areas for negotiation.