In Segulah Medical Acceleration AB v Signifier Medical Technologies Ltd (2026), the High Court considered when a creditor relying on a disputed debt has standing to seek an administration order under the Insolvency Act 1986. The decision clarifies that, for standing purposes, an applicant does not need to prove it has “the better of the argument”. Instead, it need only establish a “good arguable case”—meaning a “serious issue to be tried”—that it is a creditor.
If a convertible loan noteholder qualifies as a creditor for the purposes of paragraph 12(1)(c) of the Act, it has standing to apply for the appointment of administrators and may accelerate an insolvency filing at a time of its choosing. The mere prospect of placing the company into administration can, therefore, create significant leverage in negotiations.
Background
The respondent was a medical technology business. In 2021, it raised approximately $21.9 million from the applicants under convertible loan notes. Those notes matured in late 2023 and were to be satisfied by the issue of shares to the applicants. When the notes matured, however, the company did not issue the shares.
In September 2025, the applicants declared an event of default and demanded repayment. The company denied any default and argued that the principal had converted automatically on maturity. In November 2025, it sent share certificates to most of the applicants, but they did not accept that the shares had been validly issued and instead applied for an administration order.
The company opposed the application on three main grounds: first, that the applicants lacked standing because they were not creditors under the 2021 notes; second, that it was not unable, and was not likely to become unable, to pay its debts; and third, that the court should refuse relief in the exercise of its discretion.
The company contended that conversion on maturity effects a substantive change in the noteholders’ rights, who cease to have the benefit of a debt owed to them and instead gain a right to be issued shares in the company. On that basis, the company argued that the noteholders’ remedy was a claim for specific performance because the debt had been replaced by a right to receive shares.
The applicants contended that the company’s failure to issue the shares amounted to a failure to make payment under the notes, constituting an event of default. Once that event of default had been declared, they argued, the company could no longer discharge its obligations by issuing shares. The applicants also contended that payment need not be monetary but may instead be made in kind. When the company failed to issue the shares, it failed to make payment in that form.
The Court’s Decision
The court held that this was an appropriate case in which to exercise its discretion in favour of making an administration order.
On standing, the court held that a creditor relying on a disputed debt has standing to pursue an administration application if it can show a “good arguable case” that a debt of sufficient amount is owed. Applying Hammonds v Pro-Fit USA Ltd (2007) and preferring the approach in Isabel dos Santos v Unitel SA (2024), the court held that “good arguable case” in this context means the lower “serious issue to be tried” threshold, rather than the more demanding “better of the argument” test associated with Brownlie v Four Seasons Holdings Inc (2017).
Applying that test, the court found that there was a serious issue to be tried as to whether the applicants were creditors under the 2021 notes. Accordingly, they had standing to pursue the administration application.
On the debt issue, the court construed the 2021 notes in the applicants’ favour. It held that the company’s failure to issue shares on maturity amounted to a failure to make payment within the events of default clause. The preferable interpretation was that payment could include payment by the issue of shares and that, once the applicants had declared an event of default in September 2025, the company could not cure the position by purporting to issue shares nearly two years late.
The court did not accept that the maturity clause extinguished the debt obligation before the shares had been issued. Automatic conversion on maturity meant that, after the maturity date, the noteholders did not need to take any further steps before the company became obliged, under the conversion clause, to issue the shares. As a result, the company remained indebted to the noteholders for more than $26 million, including principal and interest.
Once the court reached that conclusion, insolvency on both a balance-sheet and cash-flow basis was no longer in dispute.
Finally, the court held that the purpose of administration was reasonably likely to be achieved and that it was appropriate to exercise its discretion in favour of making the order. It referred to evidence of historical mismanagement, ongoing conflicts among those in control, and a significant body of creditors whose patience had been exhausted. Importantly, there was no evidence of any realistic rescue proposal when the applicants were current creditors for more than $26 million.
Why the Decision Matters to Creditors
The decision addresses a common insolvency problem: whether a company can resist an administration application by arguing that the alleged debt is disputed and that therefore the applicant is not a creditor. The court confirmed that a disputed debt does not automatically preclude standing. Instead, the applicant need only show a “good arguable case” that a debt of sufficient amount is owed.
That is significant for creditors of distressed companies. It lowers the threshold for establishing standing to bring an administration application while preserving the court’s ability to scrutinise the debt more fully when considering the insolvency test and the exercise of discretion. The court emphasised that the “good arguable case” test concerns standing only and does not determine the administration application.
Creditors must still satisfy the court that the company is insolvent and that the purpose of administration is reasonably likely to be achieved. In addition, applicants must also persuade the court that it is appropriate to exercise its discretion in favour of making an administration order.
For creditors, the decision in Segulah Medical Acceleration AB v Signifier Medical Technologies Ltd makes clear that a disputed debt is not necessarily a jurisdictional bar to an administration application, provided there is a sufficiently serious creditor status issue to be tried. It also serves as a reminder that the court will distinguish between the threshold issue of standing and the subsequent substantive and discretionary stages of the application.
If you have any questions, or would like additional information, please contact one of the attorneys on our Financial Restructuring & Reorganization team.
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