The Construction Confederation, Re

An unincorporated association is not automatically an “association” capable of being wound up under Part V of the Insolvency Act 1986. The court must consider the organisation’s nature, constitutional objects, activities, liabilities and the extent to which members may be liable to contribute. Commercial organisations operated on substantial business lines may fall within the statutory jurisdiction, even where they are not conducted for profit. Ordinary recreational clubs ordinarily do not. A constitutional power or mechanism for dissolution does not itself prevent a creditor from obtaining a winding-up order. The court may also take account of a real prospect that liquidation will enable creditors to obtain a statutory or practical benefit.

The trustees of the Construction Confederation Staff Pension Scheme presented a winding-up petition against the Construction Confederation, an insolvent unincorporated trade association. The association had substantial pension liabilities and its constitution contemplated that members might be required to contribute towards liabilities. The central issues were whether the association fell within the meaning of an “association” in section 220(1) of the Insolvency Act 1986, whether its dissolution provisions prevented a winding-up order, and whether the prospect of access to the Pension Protection Fund supported the exercise of the court’s discretion.

1. The petition was granted. The Construction Confederation, an unincorporated association, was ordered to be wound up under the Insolvency Act 1986.
2. Part V of the Act provides for the winding-up of an unregistered company. Section 220(1) includes “any association”, but that expression does not extend automatically to every unincorporated association. The question is whether Parliament can reasonably be taken to have intended the particular organisation to be subject to the winding-up jurisdiction.
3. The relevant assessment is fact-sensitive. The court should examine the organisation’s constitution, objects, activities, commercial character, liabilities and the liability of members to contribute. The Construction Confederation was materially different from an ordinary social or recreational club. It operated on commercial lines, pursued trade objectives, incurred substantial liabilities and contemplated member contributions. It was therefore within the class of organisation contemplated by Parliament.
4. The existence of constitutional dissolution provisions was no bar. The principle illustrated by Re Irish Mercantile Loan Society [1907] 1 IR 98 showed that dissolution did not prevent a creditor from seeking a winding-up order. Whether a winding-up order should be made remained a matter for judicial discretion.
5. The association was plainly insolvent, with substantial unpaid and contingent pension liabilities. There was also a real prospect that liquidation would constitute a triggering event enabling access to the Pension Protection Fund. Applying the approach in Re Compania Merabello San Nicholas SA [1973] Ch 75 and Re Allobrogia SS Corpn [1979] 1 Lloyd’s Rep 190, that prospect was a sufficient additional reason to exercise the jurisdiction.
6. The Unregistered Companies Regulations 2009 applied to corporate bodies and did not govern the question whether an unincorporated association fell within section 220. The court was satisfied that it had jurisdiction and should exercise it.