East Riding of Yorkshire Council as Administrating Authority of the East Riding Pension Fund v KMG Sicav-SIF-GB Strategic Land Fund
[2024] EWHC 2845 (Ch)
East Riding of Yorkshire Council as adminisitrating authority of the East Riding Pension Fund v KMG SICAV-SIF-SA
10 May 2024
[2024] EWHC 1069 (Ch)
High Court
A pension fund tried to force a Luxembourg investment fund into bankruptcy in the UK. The court said no, because the Luxembourg fund wasn't the right kind of company for UK bankruptcy rules, and the pension fund didn't have a strong enough claim. The case shows how difficult it is to use UK laws to deal with problems in other countries' financial systems.
Key Facts
- •East Riding of Yorkshire Council (Petitioner) invested £20 million in KMG SICAV-GB Strategic Land Fund (Sub-Fund), a dedicated fund of KMG SICAV-SIF-SA (Company), incorporated in Luxembourg.
- •The Sub-Fund's investment in UK land assets failed, leading to a suspension of share trading and ultimately a liquidation with a Net Asset Value of zero.
- •The Petitioner sought a compulsory winding-up order in the UK against the Sub-Fund as an unregistered company under the Insolvency Act 1986.
- •The Sub-Fund is a compartment within a larger Luxembourg SICAV, lacking independent legal personality.
- •Luxembourg law does not allow winding-up of a dedicated fund like the Sub-Fund.
Legal Principles
Interpretation of 'unregistered company' under Insolvency Act 1986, section 220(1).
Insolvency Act 1986, section 220(1)
Standing of a contingent creditor to present a winding-up petition under Insolvency Act 1986, section 221(1).
Insolvency Act 1986, section 221(1)
Circumstances justifying a winding-up order for an unregistered company under Insolvency Act 1986, section 221(5).
Insolvency Act 1986, section 221(5)
The meaning of 'association' in the context of winding-up legislation.
Case law: In re St James Club (1852) 2 De G M & G 383; In re International Tin Council [1989] Ch 309; Re Witney Town Football and Social Club [1993] BCC 874; Re Caledonian Employees Benevolent Society 1928 S.C. 663
Application of Luxembourg law to determine whether the Petitioner is a contingent creditor.
None explicitly stated, but derived from the facts and arguments.
Outcomes
Petition dismissed.
The Sub-Fund is not an unregistered company within the meaning of section 220(1) of the Insolvency Act 1986 and the Petitioner lacks standing as a contingent creditor.
Section 220(1) is not a non-exhaustive definition.
The court found that the definition of 'unregistered company' in section 220(1) should be interpreted according to its natural meaning, based on the legislative history and case law.
The Sub-Fund lacks key characteristics of an entity subject to winding-up.
The Sub-Fund has no contributories, cannot enter into contracts independently, and its liquidation is complex due to its structure within the larger Company.
The Petitioner is not a contingent creditor.
The Petitioner failed to demonstrate a highly probable claim against the Sub-Fund. Even if such claims existed, they would be against the Company, not the Sub-Fund.