Case Digest No. 14 · Contentious insolvency
Whether a Luxembourg sub-fund can be wound up as an unregistered company
East Riding of Yorkshire Council v KMG SICAV-SIF-GB Strategic Land Fund [2025] EWCA Civ 1137
The Court of Appeal held that the Luxembourg sub-fund was not an unregistered company within section 220 of the Insolvency Act 1986 and could not be wound up under section 221.
Court of Appeal
[2025] EWCA Civ 1137
September 2025
Decision at a glance
The question, answer and consequence.
- Legal question
- The central issue was whether a Luxembourg sub-fund can be wound up as an unregistered company.
- Court's answer
- The Court of Appeal held that the Luxembourg sub-fund was not an unregistered company within section 220 of the Insolvency Act 1986 and could not be wound up under section 221.
- Practical consequence
- The Court of Appeal considered whether a compartment of a Luxembourg fund could be treated as an unregistered company for English winding-up purposes. The answer informs jurisdictional strategy where investment structures lack separate domestic legal personality.
Factual background
The KMG SICAV-SIF-GB Strategic Land Fund (the “Sub- Fund”) was a so-called “Dedicated Fund” of a specialised investment company, KMG SICAV-SIF-SA (the “Company”). The Company was incorporated as a public limited company under the laws of Luxembourg and regulated by the Luxembourg equivalent of the UK Financial Conduct Authority. The Company offered investments relating to one or more of the Dedicated Funds to institutional investors. The Dedicated Funds were not separate legal entities, but separate portfolios of assets owned by the Company and managed by it in accordance with a specific set of investment objectives. When investors invested in a Dedicated Fund, shares in the Company of a specific class corresponding to the Dedicated Funds were allotted to them. The rights of shareholders against the Company in respect of each such class were limited to the assets of the corresponding Dedicated Funds, and in the relations between the Company’s shareholders, each Dedicated Fund was treated as a separate entity (paras 6 & 7, CA
Issue
The central issue was whether a Luxembourg sub-fund can be wound up as an unregistered company.
Procedural history and reasoning
FIRST INSTANCE [2024] EWHC 1069 (Ch) Deputy ICC Judge Kyriakides Held that the Sub-Fund was NOT an unregistered company capable of being wound up under the 1986 Act and dismissed the petition presented by East Riding of Yorkshire Council (the “Council”), which had claimed to be a contingent creditor of the Sub- Fund. The deputy judge concluded that, as a matter of interpretation, and having regard to the legislative history, s220(1) contained an exhaustive definition of an unregistered company that did not include any entities that were neither companies nor associations. The word “includes” in s220(1) was designed to extend the natural meaning of “company” to include bodies such as associations, but went no further. Since it was conceded that the Sub-Fund was neither a company nor an association, it fell outside the section. In the alternative, 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.
Although the Sub-Fund was “a segregated “entity”, in respect of which trade is conducted with a view to a profit”, it lacked other characteristics that were necessary for it to be such an entity. FIRST APPEAL [2024] EWHC 2845 (Ch) Richard Smith J Agreed with the deputy judge that there was nothing in any of the decided cases to support a proposition that s220(1) extended to anything that was not an association or a company, and so he upheld the first instance decision. The Council changed its position and argued that the Sub-Fund was an “association”, or that it was a body sufficiently similar to an association or a company that it fell within the (non-exhaustive) scope of section 220(1). Even if s220(1) could be read more widely, there was nothing in the characteristics of the Sub-Fund to suggest that it was the type of body Parliament intended should be wound up as an unregistered company.
The deputy judge had been entitled to find on the evidence, and place reliance on the facts, that: the Sub-Fund did not have any contributories; it could not itself own assets or incur legal obligations or liabilities; and it had no board or management of its own. THE SUB-FUND Loans of the monies in the Sub-Fund would be made to subsidiary companies incorporated in Luxembourg. These companies would acquire land which would be progressed through the planning process before being sold to a national house builder following the award of planning consent. Shares in the Company relating to the Sub-Fund comprised Class A, A2, B and C Shares. East Riding of Yorkshire Council invested £20 million belonging to the East Riding Pension Fund by subscribing for 17,110,835 Class C Sterling Shares in the Company. THE PETITION The Council presented a winding up petition to the Companies Court for the compulsory winding-up of the Sub-Fund under the Insolvency Act 1986. Permission to serve the Petition out of the jurisdiction was granted and upheld on appeal by Michael Green J.
Decision and key points
The Court of Appeal held that the Luxembourg sub-fund was not an unregistered company within section 220 of the Insolvency Act 1986 and could not be wound up under section 221.
- The Sub-Fund was not an association which Parliament could have intended should be wound up by the Court under section 221 Insolvency Act
- Section 220(1) IA 1986 does not extend to anything other than an association or company, and to fall within it an association must be comprised of persons who have some substantive legal relationship with each other.
- Given the essential nature of the winding up process as a means of collective enforcement of debts, it could not be applied to the Sub-Fund as it was not a debtor and did not have creditors.
Why this decision matters
The Court of Appeal considered whether a compartment of a Luxembourg fund could be treated as an unregistered company for English winding-up purposes. The answer informs jurisdictional strategy where investment structures lack separate domestic legal personality.
Particularly relevant to: Funds, investors, creditors, insolvency practitioners and cross-border advisers.