BL-2024-000734 - [2025] EWHC 2166 (Ch)

Fecha: 18-Ago-2025

Mr Simon Gleeson

Mr Simon Gleeson :

A company, wishing to acquire another, purchased its secured debt from a third-party lender. It then called a default in respect of that debt and appointed administrators, hoping to acquire the company from those administrators. This is a common fact pattern, and is per se uncontroversial – it is at least as old as Wuthering Heights. The interesting point is that the company was not, at the relevant time, insolvent, and the default that was called was the consequence of the company failing to comply with non-financial covenants – specifically, those relating to the provision of information. The company’s existing shareholders, unimpressed with this manoeuvre, raised sufficient further capital to enable the company to refinance the debt on the basis of which the administrators had been appointed, and after a certain amount of negotiation the potential acquirers retreated disappointed. The administrators demitted office, leaving the company in the hands of its original owners.

These proceedings are the consequence of this chain of events. They are brought by the company (and its subsidiaries, which were also placed into administration) against the administrators, on the basis of a challenge to the validity of their appointment. It is of course the case that if the administrators were not validly appointed, they were illegitimate intermeddlers with the property of the companies, and may be liable to compensate them for their actions.

Ordinarily one might expect the potential purchaser who appointed the administrators to be joined as a party. However, that purchaser appears to have been an SPV formed for the purpose of the acquisition, and has long since ceased to exist.

These proceedings are brought by the companies – the three Claimants – against the administrators, the Defendants. This application is brought by the Defendants under CPR 3.4(2) to strike out the Claim Form and the Particulars of Claim on the grounds that they disclose no reasonable grounds for bringing the action or for reverse summary judgment pursuant to CPR 24.3.

The Defendants acted as administrators of the Claimants between 18 September 2019 and 19 November 2019. It is common ground that if the Defendants were validly appointed as administrators, this claim must fail. The question before me is therefore as to whether any of the challenges mounted by the Claimants to the validity of the Defendants’ appointment has sufficient substance to be considered to be arguable.

These challenges are broadly three in number.

That the appointors of the Defendants as administrators had no right to appoint them as such, because the assignment of the original lender’s rights to them was defective.

ii)

That the rights assigned did not include the rights which they purported to exercise. The Claimants’ failure to respond to their purported exercise therefore did not constitute an event of default under the security documentation, and no right to appoint an administrator arose.

iii)

That the appointor, as chargee, was obliged to exercise the power to require information for a proper purpose consistently with the objectives of the security. This, it is argued, is both inherent in the nature of a charge, and required by a term to be implied into the charge document. It is argued that if the request was made for an improper purpose, it should be disregarded, as should the failure to reply to it, and that therefore no right to accelerate and appoint administrators arose.

The first two of these raises a number of issues as to the construction of the security documents and the assignment. The second involves both issues of law and fact – the legal issues being whether any such duty existed, what form it took, whether its breach would have the effect of invalidating the purported action, and the issue of fact being as to whether the power was in fact exercised in breach of the obligation.

The Defendants have a second line of defence. They say that even if it were the case that the Administrators were invalidly appointed, the Claimants, by reason of their conduct recognising the Administrators as such, are now estopped from denying the validity of their appointment.