East Riding of Yorkshire Council as Administrating Authority of the East Riding Pension Fund v KMG Sicav-SIF-GB Strategic Land Fund

The statutory expression “unregistered company” in section 220(1) of the Insolvency Act 1986 is enlarged by its reference to companies and associations, but it does not extend to every entity. The court must first determine whether the subject is a company or association within the statutory language. It must then consider whether, having regard to the entity’s characteristics, Parliament could reasonably have intended it to be subject to compulsory winding-up.

A compartment or sub-fund without separate legal personality, members, contributories, assets or liabilities in its own right, and with management remaining vested in the umbrella fund, was not within section 220(1). The availability of a separate liquidation procedure under foreign law did not alter that conclusion.

The appellant, an investor in a Luxembourg umbrella investment fund, sought the compulsory winding-up of one of its dedicated sub-funds as an unregistered company under sections 220–221 of the Insolvency Act 1986.

ICC Judge Kyriakides dismissed the petition. She held that the sub-fund was neither a company nor an association within section 220(1), that Parliament could not reasonably have intended it to be wound up under that provision, and that the appellant was not a contingent creditor of the sub-fund. The appellant appealed against those conclusions.

The central issues were whether the sub-fund fell within section 220(1), whether the appellant had standing as a contingent creditor, and whether the court should exercise its discretion to make a winding-up order.

1. Appeal dismissed. The sub-fund was not an “unregistered company” within section 220(1) of the Insolvency Act 1986.
2. The words “company” and “association” define the statutory field. Although section 220(1) has an enlarging effect, it does not permit the court to treat any entity as an unregistered company merely because it has some company-like characteristics. The approach in In re St James Club, In re International Tin Council and In the Construction Confederation required attention to whether Parliament could reasonably have intended the particular association or company to be subject to the winding-up process.
3. The sub-fund was, in substance, a portfolio of assets within the umbrella structure of the Luxembourg fund. The investors were shareholders of the fund, not shareholders or members of the sub-fund. The sub-fund had no separate legal personality, contributories, directors or management committee, and did not itself own assets or incur legal liabilities. The segregation provisions gave investors and creditors limited recourse to allocated assets; they did not make the sub-fund liable for the underlying obligations.
4. The court was entitled to regard the absence of contributories, the difficulty of collecting assets and proving debts, and the risk of conflict between the fund’s directors and a liquidator of the sub-fund as significant factors. The modified insolvency regime for cells of protected cell companies under the Risk Transformation Regulations 2017 reinforced the conclusion that comparable cells were not ordinarily treated as unregistered companies. The availability of the umbrella fund as a potential winding-up target was a further relevant consideration.
5. Although unnecessary to the result, the court upheld the conclusion that the appellant had not shown itself to be a contingent creditor. The expert evidence required a liquidation surplus, or the prospect of one, to be anticipated with sufficient probability. Any creditor status was more likely to arise against the fund, rather than the sub-fund.
6. No question of discretion arose once the jurisdictional requirements failed. The parties were directed to seek agreement on the consequential order.

1. High Court (Insolvency and Companies List) — appeal from the order of ICC Judge Kyriakides dated 10 May 2024. Appeal dismissed.