East Riding of Yorkshire Council v KMG SICAV-SIF-GB Strategic Land Fund

For section 220(1) of the Insolvency Act 1986, “association” has a context-specific meaning. It requires a body whose constituent persons have substantive legal relations, founded on consensual obligations, and which is of a kind Parliament could reasonably have intended to submit to statutory winding up. Court winding up is collective enforcement of debts against property belonging to a debtor, for the benefit of its creditors.

A segregated investment compartment that is only a pool of assets owned and managed by an umbrella company is not such an association. Shareholders’ rights against the umbrella company do not give the compartment separate legal personality, property, liabilities or management. A foreign liquidation procedure does not alter that analysis. The appeal was dismissed.

East Riding of Yorkshire Council, as administrating authority of the East Riding Pension Fund, petitioned for the compulsory winding up of a Luxembourg specialised investment company’s Dedicated Fund. The Sub-Fund was a segregated portfolio of assets owned and managed by the Company, without separate legal personality. The Council claimed to be a contingent creditor.

Deputy ICC Judge Kyriakides dismissed the petition, holding that the Sub-Fund was not an unregistered company and that the Council was not a contingent creditor of it: [2024] EWHC 1069 (Ch). Richard Smith J dismissed the first appeal: [2024] EWHC 2845 (Ch), reported at [2025] Bus LR 1214 and [2025] BCC 249.

On second appeal, the Council challenged the statutory classification of the Sub-Fund, the contingent-creditor finding and the refusal to exercise an exceptional winding-up jurisdiction. The central issue was whether the Sub-Fund was an unregistered company capable of being wound up under sections 220 and 221 of the Insolvency Act 1986.

1. Disposition. Lord Justice Snowden delivered the leading judgment. Lady Justice Nicola Davies and Lady Justice King agreed. The appeal was dismissed because the Sub-Fund was not an association within section 220(1) of the Insolvency Act 1986. That conclusion made it unnecessary to determine Grounds 2 and 3.
2. Meaning of association. The word “association”, although broad in ordinary language, has a narrower meaning in the winding-up legislation. Following the approach in St. James’ Club (1852) 2 De G.M.&G. 383 and International Tin Council [1989] Ch 309, the court must consider the nature and constitution of the body and the nature of the statutory winding-up process. An association must involve persons with substantive legal relations, rather than merely social or personal connections or a common interest. The contractual foundation of such a body was explained in Caledonian [1928] SC 633. The court did not decide whether section 220(1) is limited exhaustively to companies and associations, because that point was not pursued on appeal.
3. Nature of winding up. Court winding up is a collective enforcement process against a debtor’s property. A liquidator realises and distributes the property for the benefit of creditors whose rights are established, ordinarily pari passu, as reflected in section 143(1) of the Insolvency Act 1986 and Cambridge Gas [2006] UKPC 26 and Parmalat [2008] UKPC 23. In an association, the property must belong to or be recoverable by the association, the creditors must be its creditors, and any surplus recipients must have rights against it. The existence of contributories under sections 148–152 and 226 is not a precondition to winding up.
4. Application to the Sub-Fund. The Sub-Fund was merely a collection of assets owned by the Company. Investors received shares in the Company and had rights against the Company, not direct property rights in the Sub-Fund. The Sub-Fund had no separate legal personality, capacity to contract, liabilities or management powers. Article 6(d) limited the Company’s recourse, in satisfying relevant shareholder rights, to the assets of the relevant Dedicated Fund; it did not create a separate association. A court-appointed liquidator could not manage or sell assets whose control remained with the Company and its board. The possible subject of winding up, if any, was the Company rather than the Sub-Fund.
5. Foreign liquidation and remaining grounds. The possibility of judicial liquidation under section 47 of the Law of 2007 did not show that Parliament intended the UK statutory process to apply, particularly without evidence that the Luxembourg procedure was comparable. The court added that, even if substantial recoveries were realistically possible, claims would be made in the Company’s name and the Council would at most be a contingent creditor of the Company under Articles 16(g) and 16(h), not of the Sub-Fund. Grounds 2 and 3 were not determined.

• Court of Appeal (Civil Division): [2025] EWCA Civ 1137. Appeal dismissed.
• High Court of Justice, Business and Property Courts: Richard Smith J dismissed the first appeal and upheld the decision below: [2024] EWHC 2845 (Ch), reported at [2025] Bus LR 1214 and [2025] BCC 249.
• High Court, Insolvency and Companies List: Deputy ICC Judge Kyriakides dismissed the winding-up petition, holding that the Sub-Fund was not an unregistered company: [2024] EWHC 1069 (Ch).