On 3 September 2025, the Court of Appeal handed down judgment in East Riding of Yorkshire Council v KMG SICAV-SIF-GB Strategic Land Fund [2025] EWCA Civ 1137, confirming that a “dedicated fund” of a Luxembourg specialised investment company was not an “unregistered company” within the meaning of section 220 of the Insolvency Act 1986 (the “Act”), and therefore could not be wound up by the court under section 221 of the Act.
Sections 220 and 221 of the Act provide for the winding up of an “unregistered company”, which is defined to include any association and any company that is not registered in the UK under the Companies Act 2006, including a foreign company. The Court of Appeal held that the fund in question was not an association within the meaning of the legislation (as the Council had argued), and therefore it could not be wound up by the English court.
This decision provides important clarity for UK creditors seeking to enforce their rights against foreign corporate structures, and highlights the limits of the English court’s winding up jurisdiction. This judgment effectively rules out using English insolvency procedures against these sub-funds, as the Act does not permit the winding up in England of foreign investment fund compartments that lack separate legal personality, even if they are treated as separate entities for investment purposes. This judgment, however, may mean that investors will need to carefully review any relevant structures holding the assets that they might want to enforce against and the remedies available to them.
Background
East Riding of Yorkshire Council (the “Council”) had invested £20 million in KMG SICAV-SIF-GB Strategic Land Fund (the “Sub-Fund”), a sub-fund of a Luxembourg investment company (the “Company”). The Company was incorporated under Luxembourg law and operated multiple “dedicated funds”, one of which was the Sub-Fund.
In February 2019, the Company resolved to liquidate the Sub-Fund in Luxembourg, through a process set out in the Company’s articles of association. That process involved appointing a liquidator under the supervision of the Company’s Board. Subsequent notices warned that asset realisations were unlikely and, by December 2020, the liquidation net asset value was declared to be zero, leaving no distribution to shareholders.
In May 2021, the Council presented a winding up petition to the Companies Court for the compulsory winding up of the Sub-Fund under the Act. The grounds on which the Council sought a winding up order were that the Sub-Fund had ceased to carry on business or was carrying on business only for the purpose of winding up its affairs, pursuant to section 221(5)(a) of the Act.
In a comprehensive judgment at first instance, Deputy ICC Judge Kyriakides (the “Deputy Judge”) held that the Sub-Fund was not an “unregistered company” for the purposes of section 221 of the Act that was capable of being wound up under the Act. The Deputy Judge concluded that, as a matter of interpretation, and having regard to the legislative history, section 220(1) of the Act contained an exhaustive definition of an unregistered company that did not include any entities that were neither companies nor associations. In essence, the Deputy Judge’s reasoning was that the word “includes” in section 220(1) of the Act was designed to extend the natural meaning of “company” to include bodies such as associations but went no further. Accordingly, since it was conceded that the Sub-Fund was neither a company nor an association, it fell outside the section. In case she was wrong on that point, the Deputy Judge went on to hold that the Sub-Fund was not the type of entity that Parliament could have intended should be wound up. The Deputy Judge therefore considered that it was very difficult to see how the provisions of the Act as regards winding up could be intended to apply to the Sub-Fund, and she therefore dismissed the petition filed by the Council. The Deputy Judge also held that the Council was not a contingent creditor of the Sub-Fund (as it had claimed to be) so was not entitled to present a petition against the Sub-Fund under section 124(1) of the Act.
The Council appealed, with the permission of the Deputy Judge. Richard Smith J dismissed the appeal.
Court of Appeal’s Decision
In his judgment, Lord Justice Snowden (with whom Lady Justice King and Lady Justice Nicola Davies agreed), also considered that the Sub-Fund was not an unregistered company within the meaning of the Act.
In his judgment, Snowden LJ noted that, whilst as a matter of language, the word “association” is a very general one, capable of covering a wide variety of bodies, it has been given a narrower meaning in the context of the winding up legislation. Drawing on previous authorities, Snowden LJ found that the court was required to focus its attention not only on the nature and construction of the body in question, but also upon the nature of the process of winding up by the court under the Act.
In respect of the former, Snowden LJ expressed that, to fall within section 220(1) of the Act, “an association must be comprised of persons who have some substantive legal relationship with each other, rather than persons who are connected for purely social or personal reasons or who merely share a common interest” (emphasis in the original). The Sub-Fund was not in “any sense a body whose existence was founded on some contractual obligations undertaken by any members between themselves. The Sub-Fund was simply a collection of assets owned by the Company which was managed and dealt with by the Company, separately from its other Dedicated Funds. It was not an association between legal persons at all.”
In respect of the latter, given the essential nature of the winding up process as a means of collective enforcement of debts, as the Sub-Fund was not a debtor and did not have creditors, the Court of Appeal found that the Sub-Fund was not an association which Parliament could have intended should be wound up by the court under section 221 of the Act.
1Section 221(1) of the 1986 Act provides that “any unregistered company may be wound up under this Act”. By section 220, unregistered company “includes any association and any company, with the exception of a company registered under the Companies Act 2006 in any part of the United Kingdom”.]
Trainee Solicitor Ilhem Hamouda-LaTulippe also contributed to this blog.