Nvayo founder wins right to challenge £1.9 million administration bill

The former chief executive and majority creditor of collapsed electronic money institution Nvayo Ltd has been granted permission to challenge nearly £1.9 million in remuneration and expenses claimed by the company’s special administrators, despite holding only a small customer claim and lacking support from the required 10% of customers.

Deputy Insolvency and Companies Court Judge Baister allowed Christopher Scanlon to amend his application so that it covers fees charged in pursuing all three statutory objectives of the special administration, including the return of safeguarded customer funds. The Court also permitted Scanlon to rely on the unfair harm provisions in paragraph 74 of Schedule B1 to the Insolvency Act 1986 and the Court’s inherent jurisdiction as alternative routes to challenge the fees.

Nvayo, an FCA-regulated electronic money issuer, ceased trading in August 2023 and entered special administration in February 2025. Dane O’Hara, Alex Cadwallader and Andrew Poxon were appointed joint special administrators.

At the outset of the process, Nvayo held approximately £5.32 million in safeguarded funds against customer liabilities of £5.25 million. Unsecured claims totalled approximately £2.97 million. Scanlon, Nvayo’s former chief executive and ultimate beneficial owner, is the largest unsecured creditor, with a loan claim of approximately £2.05 million.

The administrators claimed £1.89 million in remuneration and expenses after the first year of the special administration. Scanlon alleges the amount is excessive and has filed applications challenging separate tranches of fees.

His original application was brought expressly in his capacity as an unsecured creditor, which limited the challenge to work connected with regulatory engagement and either rescuing or winding up the institution. Under the applicable electronic money institution insolvency rules, only customers may challenge fees incurred in returning safeguarded funds, unless the court grants permission or customers holding at least 10% of relevant fund claims support the application.

Scanlon sought to correct the omission by amending his application and obtaining permission to proceed as a customer. His safeguarded funds claim represented only about 0.1% of total customer claims, and he had not secured support from other customers.

The administrators opposed the amendments, arguing that the special administration regime maintains a fundamental distinction between customers, who have claims against the safeguarded asset pool, and creditors, who claim against the general estate. They said Scanlon was using his position as a customer to advance his larger economic interests as a creditor and shareholder. They also argued that the creditors’ and customers’ committee had already approved their remuneration and that expanding the challenge would increase costs ahead of an expected four- to five-day hearing.

Judge Baister rejected the suggestion that Scanlon’s dual position prevented him from bringing the challenge. The Court found that the interests of customers and creditors cannot be completely separated under the statutory regime, particularly because any shortfall in safeguarded funds may create unsecured customer claims, while any surplus may ultimately fall into the general estate.

The mixed composition of the committee that approved the fees also weakened the administrators’ position, according to the Court. If a committee comprising customer and creditor representatives could approve remuneration, there was no reason an individual acting in both capacities could not challenge it.

The Court stressed that insolvency officeholders are fiduciaries who must account for their stewardship and justify their entitlement to remuneration. Approval of fees calculated by reference to time spent did not mean that all recorded time had necessarily been properly incurred.

“A final hearing that deals only with objective 2 and 3 remuneration makes little sense”, Judge Baister said, finding that the administrators’ fees could only sensibly be assessed as a whole because of overlaps and grey areas between the statutory objectives.

Judge Baister expressed concern about Scanlon’s earlier correspondence with the administrators, which included threats to challenge their remuneration unless they complied with demands concerning investigations and the conclusion of the administration. However, the Court held that the possibility of an improper collateral purpose should be addressed at the substantive hearing rather than used to block the amendments at an interlocutory stage.

The Court also granted Scanlon permission to challenge the customer-related remuneration despite his failure to meet the 10% threshold, finding that obtaining support from enough of Nvayo’s nearly 8,000 customers would be impractical, particularly where the average customer claim was about £688.

The threshold exists to protect administrators from challenges brought by customers with minor or questionable interests, but the parallel power to grant permission also exists for a reason, according to the judgment. With the committee having approved the remuneration and the FCA showing no indication that it would intervene, Scanlon appeared to be the only person positioned to obtain judicial scrutiny of the fees.

The ruling does not determine whether the administrators’ remuneration is excessive. That question will be decided at the substantive hearing, although Judge Baister urged the parties to consider mediation.

Read the decision here.

Tim Matthewson of Wilberforce Chambers (instructed by Kingsley Napley) acted for Christopher Scanlon, while Andrew Shaw of South Square (instructed by Trowers & Hamlins) acted for the special administrators.