An administrator’s appointment will not be invalid simply because directors, shareholders or creditors disagree with the decision to put a company into administration. There are, however, circumstances in which the validity of an appointment can be challenged.
The Court of Appeal decision in Glint Pay Ltd & Ors v Baker & Anor [2026] EWCA Civ 1023 provides important recent guidance. The Court held that an out-of-court appointment of administrators may be ineffective where the person making the appointment exercised the power solely for an improper purpose.
The Court did not finally decide that the administrators in Glint Pay had been invalidly appointed. It decided that the companies had a realistic prospect of proving their case and that the challenge should not have been struck out.
For companies facing an administration, the decision is therefore significant but narrow. An unwanted administration is not necessarily a defective one. The circumstances surrounding the appointment, the appointor’s rights and the purpose for which those rights were exercised all require careful consideration.
Directors who first need to understand the wider procedure can read our company administration guide.
What happened in Glint Pay v Baker?
The dispute concerned three companies in the Glint group.
Glint had borrowed money under arrangements secured by fixed and floating charges. Following an unsuccessful attempt to acquire a majority interest in Glint, Niven Alpha acquired the secured lender’s rights.
A dispute then developed concerning requests for financial information and whether an event of default had occurred. The secured loan was accelerated and administrators were appointed out of court in September 2019 by the holder of the qualifying floating charge.
A qualifying floating charge can give a secured creditor important rights if the borrower defaults, including, where the statutory requirements are satisfied, the ability to appoint an administrator.
Glint challenged the validity of those appointments.
One part of its case was that the power to appoint administrators had been exercised for an improper purpose. Glint alleged that the appointor’s sole objective was not to recover the secured debt but to obtain Glint’s business and assets through the administration process.
The High Court struck out the challenge. However, the Court of Appeal concluded that there was a realistic prospect of Glint establishing that the appointment was ineffective because of the alleged improper purpose.
Importantly, the Court of Appeal did not determine whether Glint would ultimately prove that allegation. That question remained to be resolved on the evidence.
The Court of Appeal judgment in Glint Pay Ltd & Ors v Baker & Anor [2026] EWCA Civ 1023 provides the detailed factual and legal background to the decision.
When can you challenge an administrator’s appointment?
There is no general right to overturn an administration simply because directors or shareholders consider it unnecessary, commercially damaging or unfair.
Administration is a formal insolvency procedure governed principally by Schedule B1 to the Insolvency Act 1986. Depending on the circumstances, administrators may be appointed by the court or through an out-of-court procedure.
Our explanation of administration orders and how administrators are appointed sets out the distinction between the court and out-of-court routes.
Glint Pay concerned an out-of-court appointment by a qualifying floating charge holder.
The validity of an appointment can depend on a number of issues, including whether the person making the appointment had the necessary legal right to do so, whether the relevant security was enforceable and whether the statutory and procedural requirements for the appointment were satisfied.
Glint Pay adds an important further consideration. The Court of Appeal held that a subjective improper purpose on the part of the appointor is capable of rendering an out-of-court appointment ineffective.
That does not provide a broad basis for challenging any appointment which produces a result favourable to the secured creditor.
The Court regarded the facts alleged in Glint Pay as unusual. For the purposes of the application, the companies were treated as solvent before acceleration of the secured loan, and Glint alleged that there was no genuine purpose of protecting the appointor’s interests as lender or security holder.
Businesses seeking to understand what normally happens once an administrator is appointed can read our guidance on company administrations and available rescue options.
Why can an improper purpose affect the validity of an administrator’s appointment?
A secured creditor with a qualifying floating charge may have significant enforcement rights. Those rights must nevertheless be exercised for a legally proper purpose.
In Glint Pay, the Court of Appeal distinguished between a proper enforcement purpose accompanied by an additional commercial motive and a situation where the alleged sole purpose of exercising the power was collateral and improper.
That distinction is important.
The Court considered earlier authority concerning the enforcement of security and noted that where a charge holder genuinely exercises its security for the proper purpose of satisfying the secured debt, an additional collateral purpose will not necessarily invalidate that enforcement.
Glint’s case was different. It alleged that the appointor’s only real purpose was to use the administration process as a route to acquiring the business and assets.
The Court of Appeal concluded that this allegation had a realistic prospect of being established at trial.
The decision therefore does not mean that a secured creditor cannot have a commercial interest in acquiring a distressed business. Nor does it mean that so-called “loan-to-own” strategies are inherently improper.
The Court expressly rejected such a broad interpretation. It described the circumstances alleged in Glint Pay as a long way from a typical loan-to-own strategy involving an insolvent company and a creditor seeking to maximise its recovery.
The focus is therefore on the actual purpose for which the appointment power was exercised.
What evidence may matter when challenging an administrator’s appointment?
An allegation of improper purpose is unlikely to be determined by looking at one document in isolation.
The sequence of events can be important.
In Glint Pay, the Court of Appeal considered circumstances including the failed attempt to acquire the company, the subsequent acquisition of the secured debt, requests for information, preparations for a possible pre-pack administration, acceleration of the loan and the appointor’s alleged reluctance to accept repayment.
A pre-pack administration is a recognised restructuring process in which arrangements for the sale of all or part of a company’s business or assets are made before administrators are formally appointed. Its use does not itself establish an improper purpose.
For a company considering a challenge, relevant evidence may therefore extend beyond the formal notice appointing administrators.
Loan and security documents may need to be examined alongside correspondence, information requests, default notices, negotiations and documents explaining the events leading to the appointment.
The appointor’s legal rights also remain important. A company cannot usually establish that an appointment was invalid simply by alleging an improper commercial motive without examining whether the security was enforceable and what purpose was actually being pursued.
The administrators themselves should also be distinguished from the person who appointed them.
Once appointed, administrators are independent office-holders with statutory duties and objectives. Glint Pay concerned the purpose of the appointor when exercising the power of appointment. The allegation was not that the independence of the administrators somehow made the appointor’s earlier purpose irrelevant.
Where directors are considering a pre-pack or another restructuring route before appointment, our article on pre-pack administrations and director risk explains why decisions and records created before the administration can remain important later.
What should directors, shareholders or creditors do if an administration appointment appears defective?
The first step is to identify precisely why the appointment is said to be defective.
A disagreement with the strategy adopted by the secured creditor or administrators is different from a challenge to the legal validity of the appointment itself.
The relevant finance documents, security, appointment papers and correspondence leading up to the administration should be considered together. It may also be necessary to examine whether the alleged default actually occurred and whether the person making the appointment held a valid qualifying floating charge.
Where improper purpose is alleged, evidence explaining the sequence of events and the appointor’s objectives may become particularly important.
Directors should also preserve relevant company records and communications. Decisions taken before an administration can later become relevant not only to questions about the appointment but also to an administrator’s investigation into the company’s affairs.
An administration can therefore create several separate legal issues. A challenge to the appointment should not be confused with disagreements about the administrators’ subsequent conduct or with later claims arising from the company’s insolvency.
Our wider company rescue guidance explains how administration sits alongside the other restructuring and insolvency options which may be available to a distressed company.
The practical importance of Glint Pay is that the court will not necessarily treat compliance with the formal appointment procedure as the end of the enquiry where there is a properly arguable case that the power itself was exercised solely for an improper purpose.
Equally, the case does not provide a routine method of reversing an administration.
Any challenge will depend heavily on the documents, the security arrangements, the events leading to appointment and the purpose for which the relevant power was exercised.
For directors, shareholders or creditors facing an administration in England and Wales, understanding those distinctions at an early stage can help establish whether there is a genuine legal basis for challenge or whether attention should instead be directed towards the administration process itself.
