Scanlon v O'Hara: High Court allows amendments in Nvayo special administration fee dispute

The High Court has permitted amendments to a challenge brought against the remuneration of the special administrators of Nvayo Limited, an electronic money institution that entered special administration in February 2025 under the Payment and Electronic Money Institution Insolvency Regulations 2021.

Handing down judgement in Christopher James Scanlon v Dane O'Hara & Ors [2026] EWHC 1927 (Ch), Deputy ICC Judge Baister ruled in favour of Christopher Scanlon, Nvayo's former chief executive, largest unsecured creditor and, on the administrators' concession, a customer holding modest safeguarded balances.

Scanlon, who is also the company's ultimate beneficial owner, had applied under rule 167 of the Payment and Electronic Money Institution Insolvency (England and Wales) Rules 2021 to challenge remuneration and expenses totalling £1,889,327 claimed by the joint special administrators, Dane O'Hara, Alex Cadwallader and Andrew Poxon, after a year of the administration.

His original application, however, was found to have been framed only under rule 167(1)(b), which permits challenges solely to remuneration incurred in pursuit of objectives 2 and 3 (regulatory engagement and rescue or winding up), rather than objective 1 (return of safeguarded customer funds). Both sides accepted this had been an oversight. Scanlon sought to amend the application to capture objective 1 costs, and separately to add alternative gateways under paragraph 74 of Schedule B1 to the Insolvency Act 1986 and the court's inherent jurisdiction.

The administrators resisted both amendment applications, arguing that Scanlon's dual status as creditor and customer created a conflict of interest, since creditors and customers have opposing financial incentives in relation to any surplus or shortfall in the safeguarded funds pool. They further contended that permitting the amendments would increase costs, subvert the 10 per cent customer support threshold in rule 167(2), and that Scanlon's underlying motives, evidenced by combative pre-litigation correspondence, were collateral to any legitimate purpose.

The judge accepted that the criticisms of Scanlon's conduct before instructing solicitors were serious, but concluded that a collateral purpose need not be fatal where a proper purpose also existed, citing Aabar Block SARL v Maud. He noted that Scanlon was now legally represented, which would act as a check on his conduct going forward, and that the question of motive was better left to the judge hearing the substantive application with the benefit of full evidence.

On the conflict point, Deputy ICC Judge Baister observed that the statutory customer/creditor divide, while real, is not absolute, noting that Nvayo's own creditors' committee comprised both customer and creditor representatives. He drew on Ferris J's reasoning in Mirror Group Newspapers plc v Maxwell (No 2) regarding an office-holder's fiduciary obligation to account for remuneration, finding this favoured allowing a properly motivated challenge to proceed.

The judge also granted permission under rule 167(2) for Scanlon to pursue the challenge as a customer despite lacking the requisite 10 per cent support, accepting submissions that assembling such backing from Nvayo's 7,993 customers, each holding an average claim of £688.10, was impractical. He noted the Financial Conduct Authority has no standing to challenge objective 1 costs and had shown no interest in doing so, leaving Scanlon as the only realistic means of scrutiny.

The judge invited the parties to consider mediation, describing the dispute as one "susceptible of and suitable for" resolution outside court. A substantive hearing on the remuneration challenge, expected to last four to five days, is anticipated in due course.