This article will look at the recent decision of David Doyle J in In the Matter of HQP Corporation Limited (in Official Liquidation) (7 July 2023) and its effect on the ability of investors to recover damages from a company in which they have acquired shares as a result of a fraudulent misrepresentation.

Introduction

The case involved an application by liquidators for direction in relation to three issues in the winding up of the Company:

When a plaintiff obtains judgment against an insured but insolvent defendant in the Cayman Islands is the plaintiff entitled to the policy proceeds or do they have to be paid to the liquidator for the benefit of the defendant's creditors? The answer is yes when the claim involves a vehicle but is less clear in other cases. This article considers the arguments for and against a plaintiff being entitled to the policy proceeds in cases that do not involve a vehicle.

Background

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a roughly $2 trillion coronavirus response bill signed into law yesterday, is intended to provide widespread emergency relief for Americans and the country’s economy. In addition to its benefits for individuals, the bill provides aid for small businesses, large corporations, hospitals and public health agencies, and state and local governments.

The impact of an arbitration clause on the Court’s discretion to grant a winding up order was recently considered by the Court of First Instance in Hong Kong.

In Lasmos Limited v Southwest Pacific Bauxite (HK) Limited (HCCW 227/2017; [2018] HKCFI 426), the Court dismissed a winding up petition in view of an arbitration clause contained in the agreement between the parties and held that the dispute concerning the alleged debt should be dealt with in accordance with the arbitration clause.

Facts