Background
Nvayo Limited, an FCA-regulated electronic money institution, ceased trading in August 2023 and entered special administration in February 2025. The special-administration regime requires its administrators to return safeguarded customer funds, engage with regulators and payment-system operators, and either rescue or wind up the institution. After approximately one year, the administrators had claimed £1,889,327 in remuneration and expenses.
Christopher Scanlon, Nvayo’s former CEO and ultimate beneficial owner, was its largest unsecured creditor, with a loan claim of £2,053,649, and was also recorded as a customer with comparatively small safeguarded balances. His original application challenged the administrators’ remuneration in his capacity as an unsecured creditor, but an oversight meant that it did not properly invoke the rule allowing a customer to challenge fees charged against safeguarded funds for work pursuing the return-of-funds objective.
Scanlon sought amendments permitting that broader challenge and requested the court’s permission to proceed despite lacking support from customers holding at least 10% of safeguarded-fund claims. He also sought to add alternative grounds under paragraph 74 of Schedule B1 to the Insolvency Act 1986 and the court’s inherent jurisdiction. The administrators opposed the amendments, citing the statutory distinction and potential conflict between customer and creditor interests, Scanlon’s small customer claim, increased costs, and concerns about collateral motives.
The Court’s Holding
The High Court allowed all the requested amendments and granted Scanlon permission under rules 167(1)(c) and 167(2) of the Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021. The court held that the proposed challenge had a real prospect of success and that the administrators’ remuneration could be assessed sensibly only as a whole, including fees attributable to returning safeguarded customer funds as well as work pursuing the other statutory objectives.
The court also permitted Scanlon to plead paragraph 74 of Schedule B1 and the court’s inherent jurisdiction as alternative gateways. It did not decide that those grounds would ultimately succeed, nor did it decide whether the remuneration was excessive. Those questions remained for the substantive hearing.
Although Scanlon held only about 0.1% of relevant customer claims and had not obtained the statutory 10% concurrence, the court found permission appropriate on the case’s particular facts. Obtaining support across nearly 8,000 customers was impractical; neither the committee nor the FCA appeared likely to initiate scrutiny; and Scanlon had a real interest in the outcome. Potential conflicts arising from his dual status and questions about collateral motives could be managed and evaluated at the final hearing.
Key Takeaways
- A customer may receive permission to challenge special administrators’ remuneration without satisfying the 10% concurrence threshold when the circumstances justify judicial scrutiny.
- Committee approval of time-based remuneration does not establish that every recorded hour was properly spent; insolvency office-holders must justify their entitlement to remuneration.
- The ruling concerned permission and amendment only: it did not determine that the administrators’ £1.889 million in remuneration and expenses was excessive.
Why It Matters
The decision confirms that the permission mechanism within the electronic-money special-administration rules has practical force and may provide a route to scrutiny where dispersed customers cannot realistically coordinate enough claims to meet the numerical threshold. It also recognizes that safeguarded funds and the general insolvency estate, though legally distinct, may interact economically.
The judgment is expressly fact-specific and does not establish a general test for permission under rule 167. Even so, it underscores the court’s willingness to facilitate a reasoned remuneration challenge while reserving questions of excessiveness, motive, standing under alternative gateways, and ultimate relief for trial.