East Riding of Yorkshire Council as adminisitrating authority of the East Riding Pension Fund v KMG SICAV-SIF-SA

The statutory definition of an “unregistered company” in section 220(1) of the Insolvency Act 1986 is not inexhaustive. It extends the natural meaning of the term to the companies and associations identified in the provision, but not to every entity lacking separate legal personality.

A segregated investment compartment is outside the winding-up jurisdiction where it cannot itself acquire rights, incur obligations, own assets, have contributories or be represented by its own management body. A shareholder seeking to petition as a contingent creditor must establish both a claim belonging to the relevant legal entity and a highly probable prospect that it will produce a surplus.

The petitioner invested in a Luxembourg specialised investment fund through a dedicated compartment. After the compartment’s investments were liquidated and creditors paid in full, the petitioner sought its compulsory winding-up in England as an unregistered company under sections 220 and 221 of the Insolvency Act 1986.

The petition followed proceedings concerning service out of the jurisdiction. The central issues were whether the compartment was an unregistered company, whether the petitioner was a contingent creditor with standing, and whether a statutory ground for winding-up existed.

1. Petition dismissed. The court lacked jurisdiction to wind up the Sub-Fund.
2. Section 220(1) of the Insolvency Act 1986 is not an inexhaustive provision. The word “includes” enlarges the natural meaning of “unregistered company” only to include the companies and associations specified in the subsection. It does not permit the court to add entities of wholly different kinds.
3. The Sub-Fund was neither an unregistered company in the natural sense, a company nor an association. Even if section 220(1) were wider, Parliament could not reasonably have intended this compartment to be subject to Part V. It had no members or contributories, could not itself acquire rights or incur liabilities, owned no assets, and had no board or management committee. The Company owned the assets, bore the legal obligations and controlled the directors. The insolvency legislation provided no adequate mechanism for the liquidator to administer the Sub-Fund’s assets or pursue claims vested in the Company.
4. The statutory treatment of protected cells in the Risk Transformation Regulations 2017 reinforced that conclusion. Those Regulations expressly provide that a cell may be wound up “as if” it were an unregistered company and modify the insolvency legislation to create legal personality, ownership, liabilities, records and office-holder relationships for that purpose.
5. The petitioner also failed to establish standing. Under Luxembourg law, an investor may become a contingent creditor where a claim exists and it is highly probable that the claim will produce a surplus. The evidence showed matters requiring investigation, but did not establish any claim or a highly probable prospect of success. Any creditor claim relating to the Sub-Fund would ordinarily be against the Company, with enforcement limited to the relevant assets, rather than against the Sub-Fund itself.
6. The court considered that, had the jurisdictional conditions been satisfied, cessation of trading would have been sufficient under section 221(5). It declined to determine the discretionary question because the petition failed on jurisdiction and standing.

The judgment itself records earlier interlocutory proceedings concerning service out of the jurisdiction. ICC Judge Prentis granted permission on 18 May 2021. ICC Judge Burton set that order aside on 2 February 2023. Mr Justice Green allowed the petitioner’s appeal on 24 July 2023 and restored permission. The present court subsequently dismissed the petition on the substantive jurisdictional issues.