Bermuda Courts Answer Key Questions Relating To 'soft Touch' Provisional Liquidation

Today 'soft touch' provisional liquidation is one of the most commonly deployed tools for facilitating a restructuring of offshore incorporated companies listed in Hong Kong and Singapore. However, when soft touch provisional liquidation was first developed by the Bermuda Court for this purpose, it was regarded as a tool of last resort.

Directors were hesitant to voluntarily deploy a mechanism which not only suggested that the company was in 'liquidation' but had been most often used in England and Wales as 'the nuclear weapon of the companies court' to urgently oust the boards of companies at risk of having their assets dissipated. From a substantive perspective, there were also good reasons to be hesitant. There was little decided authority on issues critical to the success of any restructuring such as whether foreign what principles would apply to determining the identity of the liquidators and whether soft touch provisional liquidators would be recognised in