Key Points

  • Paragraph 13 of Schedule 4 to the Insolvency Act 1986 ("Paragraph 13") permits a liquidator to do all acts "necessary" for the winding up and distribution of property.
  • The decision as to what action is "necessary" is one for the liquidators (albeit subject to sanction).
  • Nothing in FSMA 2000 prevented the investors from assigning their claims against the former operators..

The facts

A collective investment scheme set up as a limited partnership (the "Fund") was wound up by the Court. Over 1,000 retail investors (whose subscriptions totalled c.£75m) assigned, to the liquidators, their claims against the former operators of the Fund. The operators disputed the validity of the assignment.


The various grounds of dispute were dismissed, including that:

  1. the liquidators' powers did not extend to pursuing claims which were not part of the Fund's assets prior to winding up. The Judge disagreed because the power in Paragraph 13 was wide enough to permit a liquidator to do all acts "necessary" for the winding up and distribution of property; and
  2. claims under sections 138D or 150 of FSMA 2000 must be brought by the private person affected. It was held that the wording of these sections did not restrict the persons' right to assign.


The grounds raised by the Defendant were highly technical and enjoyed little sympathy with the Court. The Court also confirmed the commonly understood position that question of whether or not to bring such claims was a question of commercial judgement for the liquidators (subject to sanction).

The Connaught Income Fund, Series 1 (in liquidation) v. Capita Financial Managers Limited and Anor