The recent case of Re China Bozza Development Holdings Ltd [2021] HKLRD 977 demonstrated the attitude and increased scrutiny of the Hong Kong Companies’ Court towards offshore soft-touch provisional liquidation.

The leading authority on the meaning of soft-touch is the British Virgin Islands case of Re Constellation Overseas Ltd BVIHC (Com) 2018/0206,0207,0208, 0210 and 0212 . (§3) :

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Introduction

In Berryman v Zurich Australia Ltd [2016] WASC 196 it was decided that a bankrupt's entitlement to claim a TPD benefit under a life insurance policy is not an entitlement that is divisible amongst the bankrupt's creditors, and therefore such an entitlement does not vest in the Official Trustee in bankruptcy. Tottle J of the Supreme Court of Western Australia ruled that the bankrupt insured could continue an action in his own name to recover the TPD benefit. Life insurers may need to adjust their claims' payment practices in light of the Berryman decision.

Consider this situation: a dispute has arisen between two parties in relation to an agreement which is subject to an arbitration clause. Separately, a winding up application has been made against one of the parties to the arbitration in the jurisdiction in which it is incorporated. An arbitral award is obtained against the potentially insolvent company. That company has assets in Hong Kong, against which the creditor is now seeking to enforce their rights.

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