Restructuring & Insolvency 2020

The Companies Act 1981 (Companies Act) and the Companies (Winding-Up) Rules 1982 (Rules) are the main pieces of legislation regulating the reorganisations and insolvencies of corporate entities in Bermuda. The reorganisation and insolvency regimes provided by the Companies Act are derived largely from the English Companies Act 1948.

The Companies Act is applicable to the insolvencies or reorganisation of all corporate entities in Bermuda, save to the extent that its provisions are amended by other legislation that applies to specific types of corporate entities, including: the Insurance Act 1978 for licensed insurance companies; the Segregated Accounts Companies Act 2000 for licensed segregated accounts companies; and once in force, the Banking (Special Resolution Regime) Act 2016 (Banking (Special Resolution Regime) Act) for licensed banks.

Assets that do not properly form part of an entity’s estate upon the commencement of that entity’s insolvency (ie, from the date that a winding-up petition is presented to the Bermuda Court) are excluded or exempted from claims of creditors. These assets are those that: have been validly charged as security for a debt; are held in trust by the insolvent entity; or have been validly assigned.

The Companies Act is applicable to the reorganisations and insolvencies of government-owned enterprises in Bermuda, with no special or extra remedies accruing to their creditors. A court-supervised insolvency of a government-owned entity has yet to be pursued in Bermuda.

There is no legislation in Bermuda providing for the insulation or protection of financial institutions in difficulty through beneficial financial or economic policies from the Bermuda government or otherwise. While the Banking (Special Resolution Regime) Act provides special rules for the insolvency of licensed banks, it does not provide for bailouts.

A petition for the reorganisation or winding up of a company, and any ancillary applications thereto (for example, an application for the appointment of provisional liquidators), is made to the Supreme Court of Bermuda, Commercial Court. There is a right of appeal to the Court of Appeal of Bermuda, with leave for appeals from interlocutory orders and without leave for final orders. The appellant is usually required to provide security for the costs of an appeal in accordance with the directions of the Registrar of the Court of Appeal.

The Companies Act provides for the voluntary liquidation of a company by way of a ‘members voluntary winding up’ or a ‘creditors voluntary winding up’ pursuant to a resolution for the company’s winding up being passed at a general meeting of its shareholders. From the commencement of the voluntary winding up, the company ceases to carry on business except to the extent required for its beneficial winding up.

To pursue a members’ winding up, the majority of the directors of the company must file a statutory declaration to the effect that in their opinion the company will be able to pay its debts in full within a stated period, not exceeding 12 months from the commencement of the winding up.

To pursue a creditors’ winding up, the company must convene a meeting of the company’s creditors for the day, or the day following the day, of the commencement of the winding up for purposes of appointing a liquidator.

The only court-supervised reorganisation procedure in Bermuda is the ‘scheme of arrangement’ procedure provided for in sections 99 and 100 of the Companies Act. A scheme of arrangement may be initiated by the company, any member or creditor of the company or, where applicable, a liquidator who has been appointed in relation to the company. A proposed scheme must represent a compromise or arrangement between the company and its creditors or members, or any classes thereof.

For a scheme to be presented to the Bermuda courts for sanction, a majority in number representing 75 per cent in value of the creditors or members present and voting either in person or by proxy at each creditors’ or members’ class meeting, as the case may be, must approve the scheme.

Classes of creditors are determined by the requirement for a class to be confined to those persons whose rights (as affected by the proposed scheme) are not so dissimilar as to make it impossible for them to consult together with a view to their common interest.

‘Cram up’ or ‘cram down’ (as those terms are generally understood in reorganisation proceedings) of a scheme of arrangement on to any dissenting class of creditors or members is not permitted in a Bermuda scheme of arrangement. To the extent that any single class of affected creditors or members fails to approve the scheme of arrangement by the requisite majority, the scheme will fail in its totality.

Depending on the law governing the underlying obligation, a scheme of arrangement may include third-party releases from liability.

Typically, a creditor seeking to place a debtor into insolvent winding up in Bermuda will present a petition to the court seeking this relief on the grounds that: the company is unable to pay its debts; or it is just and equitable for the company to be wound up.

The proceedings of an involuntary winding up differ from those of a voluntary winding up in that: the provisional liquidator or liquidator in an involuntary winding up is subject to supervision by the Supreme Court of Bermuda and they must obtain the sanction of the court or the committee of inspection before taking certain actions; upon the final distribution of the assets to the creditors or members, the liquidator must obtain an order from the court for its release and for the dissolution of the company. Voluntary solvent liquidations are not subject to court supervision.

There are no involuntary reorganisation procedures in Bermuda; reorganisations may only proceed with the support of the company or its liquidator, as the case may be.

The Companies Act does not provide a statutory mechanism for an expedited reorganisation, including a reorganisation by way of a ‘pre-packaged’ arrangement.

A reorganisation may be largely informally pre-negotiated with a liquidator prior to his or her appointment on the informal understanding that the liquidator will, once appointed, agree to the pre-negotiated deal. An informal arrangement of this nature will have a similar effect to a ‘pre-package’ deal but the structure, content and nature of each such arrangement will be bespoke to its specific circumstances. The liquidator will not, and as a matter of law cannot, be bound to enter into the pre-negotiated arrangement if and to the extent that, upon his or her appointment, the liquidator does not consider the pre-negotiated arrangement to be in the best interests of the company’s creditors.

A scheme of arrangement is defeated if the scheme is not approved by the requisite majority of each class of affected creditors or members, as applicable or the scheme is not sanctioned by the courts. The effect of a scheme of arrangement not being approved is that the company’s and its creditors’ or members’ rights and obligations remain unchanged (ie, the failure of a scheme of arrangement has no residual effect). If the debtor fails to perform the plan (once sanctioned by the court), the creditors or members, as applicable, may seek the assistance of the courts in enforcing the plan. A failed scheme will generally result in a winding-up.

There are no corporate procedures for the dissolution of a corporation outside of the voluntary winding-up procedures provided for in the Companies Act (ie, members’ voluntary winding up and creditors’ voluntary winding up). Under Bermuda Law, there is no concept of corporate bankruptcy.

After the liquidator has realised the debtor’s assets and paid off the respective debts and expenses or made any necessary distributions, the liquidator, in the case of involuntary liquidations, must apply to the court for an order releasing him or her and dissolving the company.

In voluntary liquidations, the company is deemed to be dissolved following a final resolution of members pursuant to which the liquidator’s final accounts are accepted. The liquidator will notify the Registrar of Companies of the company’s dissolution, who will strike the company from the Register of Companies.

A scheme of arrangement is formally concluded by the delivery of the court’s order sanctioning the scheme of arrangement to the Registrar of Companies.

The Companies Act does not define or use the terms ‘solvency’ or ‘insolvency’, but rather refers to a company being ‘unable to pay its debts’. A company will be deemed to be unable to pay its debts if: the court is satisfied that the company is unable to pay its debts taking into account the contingent and prospective liabilities of the company; the company fails to discharge an undisputed statutory demand exceeding 500 Bermuda dollars within 21 days; or execution of a judgment or order against the company is returned unsatisfied.

A company is not under any statutory duty to commence winding up in circumstances where it is insolvent or likely to become insolvent. In insolvent circumstances, however, the directors of a company must act in the best interests of the company’s unsecured creditors. Directors who consider a winding up of the company to be in the best interests of the company’s unsecured creditors, but who are outvoted on the issue, usually resign from office.

Bermuda law does not incorporate the concept of ‘wrongful trading’ in circumstances where the company continues to trade while insolvent. See question 18 for further details on other sources of directors’ liability.

Following the commencement of winding-up proceedings, a director may be held personally liable for the company’s obligations (in such amounts as the court considers just or appropriate) if it is shown that the director: was knowingly a party to the carrying on of the company with the intent to defraud creditors; misapplied, retained or became liable or accountable for any money or property of the company; or is guilty of any misfeasance or breach of trust in relation to the company. In certain circumstances, a director may also be personally liable for certain categories of the company’s obligations such as unpaid taxes or pension contributions.

A director may be held civilly or criminally liable pursuant to the liquidation of the company, including:

• failing to provide the liquidator with full and frank disclosure;
• fraudulently removing or concealing the assets of the company;
• falsifying the accounts or affairs of the company;
• fraudulently inducing a person to provide credit to the company; or
• dealing with the assets of the company with the intent to defraud the creditors.

Where a company is insolvent, the liquidator would have the standing to be the claimant in any actions brought against a director in respect of a breach of duty. Practically, however, Bermuda law allows companies to indemnify their directors for breaches of fiduciary duties or acts of negligence. By-laws for Bermuda companies normally contain clauses that exonerate directors from liability to the company for losses sustained following a breach of duty, except where such breach(es) involved fraud or dishonesty. As a result, claims against directors alleging a breach of duty or negligence are uncommon. Furthermore, directors are not liable for a breach of duty where it can be demonstrated that, on the occasion of the breach, the director relied in good faith on the financial statements of the company represented to him or her by another officer of the company; or a report of an attorney, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by him or her.

In the context of an insolvency or reorganisation, a director may successfully defend a claim alleging negligence, default, breach of duty or trust where it can be demonstrated that the director acted honestly and reasonably, and where the court considers that, in all circumstances, it is reasonable to excuse him or her for the alleged negligence or breach of duty or breach of trust either wholly or in part.

In circumstances where a company is insolvent (ie, unable to pay its debts) or is likely to become insolvent, the directors’ duties shift from being owed to the company’s general body of shareholders to being owed to the company’s general body of unsecured creditors with continuing economic interests in the company. There is no bright line test as to when and to what extent the directors’ duties shift to the company’s unsecured creditors; the less the likelihood of the company escaping an insolvent winding up, the greater the degree to which the directors’ duties are owed to the company’s unsecured creditors.

In the ordinary course in insolvent winding-up proceedings, the directors and officers of the company cease to have any powers upon the appointment of a liquidator or the making of a winding-up order.

During reorganisation proceedings, however, the extent of the directors’ and officers’ continuing powers may vary depending on the circumstances of the reorganisation. In circumstances where a reorganisation is pursued by a liquidator of a company that has already been wound up, the directors and officers of the company have no continuing powers. In circumstances where a provisional liquidator is appointed with limited powers to oversee the company’s reorganisation (‘light-touch’ powers), the directors and officers may continue to exercise all powers subject only to those limitations, if any, required by the court.

Upon the appointment of a provisional liquidator or the making of a winding-up order in relation to a company, no action or proceeding shall be proceeded with or commenced against the company except by leave of the court.

Secured creditors are largely unaffected by the automatic stay of proceedings in that they may either enforce their security pursuant to ‘self-help’ remedies included in the security provisions or may otherwise obtain leave from the court to commence or continue enforcement proceedings against the company.

Typically, a provisional liquidator or liquidator may continue to carry on business with the consent of the court or the committee of inspection. Subject to the court’s or committee of inspection’s sanction, expenses incurred by the liquidator in carrying on the business will be paid out of the assets of the company as expenses of the liquidation in priority to other unsecured creditors.

A provisional liquidator may be appointed with limited (light-touch) powers to oversee the reorganisation of the company. In these circumstances, the directors and officers remain in control of the company and the company continues to carry on business as usual.

Generally, the debtor is not permitted to incur additional liabilities after insolvency proceedings have commenced. However, subject to the court’s approval, a creditor may enter into a ‘funding agreement’ whereby a creditor may advance funds for specified purposes, typically to fund certain costs of the winding-up proceedings. The creditor of the funding agreement will receive priority repayment on the amount advanced to the liquidator ahead of unsecured creditors.

A liquidator may, subject the court’s or committee of inspection’s sanction, sell any unsecured asset or the entire business of the debtor. Unless the asset is subject to continuing security or as otherwise specifically agreed, the purchaser will acquire the asset ‘free and clear’ of claims without any liabilities attaching thereto.

In the ordinary course, stalking horse and credit bids (where the creditor is the original creditor or an assignee) are permissible in Bermuda. In assessing the fairness of a credit bid, the court will take into account relevant circumstances relating to the bid and may seek to rely on an independent valuation by an expert assessor.

With the leave of the court, a liquidator may disclaim any property belonging to the company, whether real or personal, including any right of action or right under a contract that in the liquidator’s opinion is onerous for the company to hold or is otherwise unprofitable or unsaleable.

Before granting the liquidator leave to disclaim onerous property (including a contact), the court may require notice to be given to interested persons and may impose any conditions on the disclaimer as the court thinks just.

From the date of the disclaimer, the company will be released from its obligations in or in respect of the released property. The disclaimer does not, except so far as necessary, affect the rights or liabilities of any other parties. A person who is injured as a result of the disclaimer will be deemed a creditor in the company’s winding up in respect of the amount of the injury.

As a general rule, an IP licensor may not be able to terminate a company’s right to use duly licensed IP as a result of the company entering into insolvency or reorganisation proceedings unless expressly entitled to do so in the relevant licencing agreements.

The Personal Information Protection Act 2016 (PIPA) was anticipated to come into force in late 2018, but is not yet in force as at 29 October 2019. PIPA outlines the requirements for the use and transfer of personal information by companies. In particular, PIPA requires, among other things, that personal information should be used: in a lawful and fair manner; for limited specific purposes; and adequately and not excessively in relation to its purpose. In terms of the transfer of data, PIPA expressly regulates the transfer of data to overseas third parties, but generally permits the transfers of personal information to third parties who adhere to a comparable level of protection as that required by PIPA.

There are no known data on the frequency of arbitration in liquidation or reorganisation proceedings in Bermuda. Generally, disputes arising out of insolvency proceedings are not arbitrable as they fall under the exclusive jurisdiction of the courts (eg, disputes relating to the conduct of the liquidator or the validity of a winding-up petition). To the extent that the existence of a liability owed by the company to a creditor is disputed by the liquidator, and such dispute would normally be resolved by arbitration, the parties may commence or continue arbitration proceedings with the leave of the court.

As detailed in question 2, secured assets do not properly form part of an entity’s estate upon the commencement of that entity’s insolvency and are excluded or exempted from claims of creditors. Secured assets may be seized outside of court proceedings pursuant to the ‘self-help’ provisions contained in the relevant security documents.

There are no other processes by which some or all of the assets of a business may be seized outside of court proceedings.

In the ordinary course, outside of insolvency proceedings, an unsecured creditor may enforce a judgment by means of a writ of execution, writ of possession or garnishee order.

Pre-judgment attachment is not available to unsecured creditors. In certain circumstances, however, an unsecured creditor may be able to obtain injunctive relief prohibiting the company from disposing of assets pending judgment.

In winding-up proceedings, notices are ordinarily given to creditors pursuant to:

• the presentation of the winding-up petition;
• the appointment of provisional liquidators or liquidators;
• the filing of proofs of debt;
• the convening of all creditor meetings; and
• the liquidator’s application for his or her release and the dissolution of the company.

In winding-up proceedings, creditor meetings are convened:

• in the first instance, to approve the appointment of permanent liquidators and a committee of inspection, if any;
• annually to consider the liquidator’s annual reports;
• as required to consider any extraordinary business; and
• finally, to approve the liquidator’s final distribution account.

In winding-up proceedings, creditors are generally entitled to know the total assets and liabilities of the company and to receive copies of any reports submitted by the liquidator to the court. Creditors do not have a general right to access the books and records of the company, but may only do so through an application to the court. At the end of the liquidation, the liquidator must send a copy of the statement of receipts and payments of the liquidation to all creditors and contributories, together with a final report and notice of their intention to apply for release from the court.

In a scheme of arrangement, creditors receive an explanatory memorandum that details the nature and effect of the proposed scheme. The explanatory memorandum will include such financial information as is necessary to enable the creditors to make an informed decision regarding the scheme. Generally, creditors will receive notice of the proposed scheme of arrangement together with notice of the creditors’ meeting.

A committee of inspection may be formed consisting of creditors or contributories (members) of the company. Subject to the sanction of the court, members of the committee of inspection are appointed by resolution of the creditors or the contributories, typically at the first meeting of creditors or contributories. The committee of inspection may sanction, in lieu of a court sanction, the liquidator:

• bringing or defending actions;
• carrying on the business of the company;
• appointing an attorney;
• paying any classes of creditors in full;
• making any compromise or arrangement with the company’s creditors; and
• otherwise compromising calls and liabilities. They may also fix the remuneration to be paid to the liquidator.

There is no prescribed upper limit on the number of committee members, although the Companies Act 1981 infers that the committee should contain at least two members, because if there are less than two members, the committee cannot act. Members of a committee of inspection are not paid except for reimbursement of their reasonable expenses, including the reasonable costs of advisers.

Subject to the sanction of the court or committee of inspection, in circumstances where a liquidator has no assets to pursue a claim, a claim may be pursued: by a specific creditor pursuant to the claim being assigned to that creditor for value; or by the liquidator pursuant to a funding agreement.

A liquidator will notify creditors of the requirement to submit proofs of their debts by way of: advertising in the appointed newspaper in Bermuda; and by writing to all creditors appearing in the company’s books and records. The liquidator will specify the time period in which all proofs of debts must be submitted, which must not be less than 14 days from the date of the notice. If a liquidator rejects a proof of debt, he or she must state his or her grounds in writing to the creditor. If the claim is rejected, a creditor can appeal the liquidator’s decision by applying to the court within 21 days of receiving the notice of rejection.

Provided contingent or unliquidated claims arise from enforceable obligations, creditors of such contingent or unliquidated debts may submit proofs of debt on the basis of a just estimate.

Subject to public policy prohibitions against the trading in discounted debts of an insolvent company, a claim in liquidation can be assigned by a creditor and can be the subject of a proof of debt for the full amount (post-liquidation interest is payable after payment in full of all unsecured creditors’ debts).

Automatic set-off arises pursuant to section 235 of the Companies Act and section 37 of the Bankruptcy Act 1989 (Bankruptcy Act), the latter providing that where there are mutual credits, mutual debts or other mutual dealings between the insolvent company and a creditor, account shall be taken of what is due from the one party to the other in respect of mutual dealings, and the sum due from the one party shall be set off against any sum due from the other party. It is not possible to contract out of section 37 of the Bankruptcy Act.

No, the court does not have the jurisdiction to change the rank (priority) of a creditor’s claim. The court may, however, order that post-liquidation debts will be paid in priority to all other unsecured claims.

In winding-up proceedings, all taxes owing to the Bermuda government and rates owing to a municipality will be paid in priority to the claims of unsecured creditors in the company. In the ordinary course, a secured creditor may enforce his or her security in priority to all other claims, subject only to the priority of other secured creditors.

In reorganisation proceedings, there are no statutorily mandated preferential payments or priority of claims.

Pursuant to section 33 of the Employment Act 2000 (Employment Act), upon the liquidation of an employer’s business, all employment contracts will be automatically terminated one month from the date of the winding up, unless the business is continuing to operate.

Upon termination of an employment contract pursuant to the Employment Act, employees working in Bermuda may be entitled to recovery of accrued entitlements (payments for vacation and wages accrued) and severance pay equivalent to a maximum of 26 weeks of their annual salary and benefits.

Termination of employment may also give rise to claims for compensation or redundancy payments under the Employment Act or Workmen’s Compensation Act 1965 (Workmen’s Compensation Act) as an unsecured, preferential claim in liquidation. Save for any contractual provision otherwise, those claims are limited to a maximum of 2,500 Bermuda dollars per employee (irrespective of how many employees’ contracts are terminated).

In winding-up proceedings, the following employee and pension related claims will be paid in priority to the claims of unsecured creditors in the company:

• wages and salaries;
• accrued holiday remuneration;
• unpaid contributions under the Contributory Pension Act 1970 (Contributory Pension Act) or other insurance contracts payable in the 12 months prior to the winding up of the company; and
• amounts due in respect of any compensation or liability for compensation under the Workmen’s Compensation Act.

Apart from the priority of unpaid contributions under the Contributory Pension Act, there is no priority that attaches to claims for deficiencies in such plans.

In reorganisation proceedings, there are no statutorily mandated preferential payments or priority of claims relating to pension claims.

There are no environment-specific provisions in Bermuda’s insolvency or reorganisation processes that provide for the controlling and remediation of environmental damage.

Generally, no liabilities of the company will survive the winding up of that company. In reorganisation proceedings, only those liabilities that are compromised or otherwise discharged pursuant to the terms of the scheme of arrangement will be compromised or otherwise discharged. All other liabilities will survive the reorganisation proceedings.

In winding-up proceedings, distributions are made to creditors by the liquidator on an ad hoc basis with the sanction of the court or committee of inspection or in accordance with the final distribution accounts. In reorganisation proceedings, distributions are made to creditors in accordance with the terms of the scheme of arrangement.

The principal types of security taken over immovable property are mortgages (legal and equitable) and fixed charges.

The principal types of security taken over movable property are mortgages, fixed charges, floating charges, pledges and liens and retention of title clauses in contract.

Any conveyance, payment, execution or other act relating to property made or done by or against a company within six months before the commencement of its winding up may, in certain circumstances, be deemed a fraudulent preference of its creditors and accordingly held invalid. To constitute a fraudulent preference, the relevant act must have been done with the dominant intention to prefer the particular creditor who benefited from the act.

A floating charge granted by a company within 12 months before the commencement of its winding up is void unless the debtor can prove that it was solvent upon the grant of the charge, except to the extent that the charge was granted in exchange for cash consideration (together with any interest that has accrued on the consideration so provided).

A liquidator, with the sanction of the court, may disclaim any property belonging to the company (whether real or personal) which in his or her opinion is onerous for the company to hold or is otherwise unprofitable or unsaleable. In any winding up by the court, any disposition of property of the company including things in action, and alteration of its members, made after the commencement of the winding up shall be void unless the court orders otherwise. Irrespective of whether a company has commenced liquidation proceedings, a transaction may be vulnerable to being set aside by an eligible creditor as a fraudulent conveyance. To be set aside as a fraudulent conveyance, the transaction must constitute an undervalued disposition of property with the dominant purpose to place the property beyond the reach of creditors. Normally, eligible creditors have six years within which to initiate proceedings to set aside a transaction as a fraudulent conveyance, although this period may be extended to eight years in certain circumstances.

There are no restrictions on claims by related parties or non-arm’s length creditors in Bermuda.

Normally, the court will uphold the legal concept of separate legal identity that accrues to a company. A court cannot order a distribution of group company assets pro rata without regard to the assets and liabilities of the individual corporate entities involved.

Proceedings for the insolvencies and reorganisations of a group of companies may occur concurrently for practical efficiency but remain legally separate proceedings. In the absence of a scheme of arrangement or other consensual arrangement between the group of companies and their creditors, the assets of the companies are not pooled for distribution.

Under the Reciprocal Judgements Act 1958 (Reciprocal Judgements Act), a judgment of a superior court in the United Kingdom or other designated common law jurisdiction may be registered as a judgment in the Bermuda courts to the extent the foreign judgment is final and conclusive as between the parties and is for a fixed sum of money (not being in respect of taxes or in respect of fines or penalties).

Under Bermuda’s common law, the Bermuda courts may, subject to certain requirements, recognise judgments from foreign jurisdictions not otherwise qualifying for registration under the Reciprocal Judgments Act for a liquidated sum by way of summary judgment.

Bermuda has not adopted the UNCITRAL Model Law on Cross-Border Insolvency and is not currently considering its adoption. Foreign liquidators may apply for recognition in Bermuda pursuant to Bermuda’s common law and the principles of comity.

There is no distinction between foreign and local creditors in liquidations or reorganisations.

Yes, with the sanction of the Bermuda courts.

As Bermuda has not adopted the UNCITRAL Model Law on Cross-Border Insolvency (see question 51), the concept of COMI does not have direct application in Bermuda. Any company to whom the Companies Act applies, being ordinarily a company that is incorporated in Bermuda, may avail itself of the insolvency and restructuring processes provided for in the Companies Act irrespective of whether it has any business operations or assets in Bermuda.

The Supreme Court of Bermuda has no jurisdiction to wind up foreign companies with the exceptions of ‘non-resident insurance undertakings’ (pursuant to the Non-Resident Insurance Undertaking Act 1967) and ‘permit companies’ (the latter being companies incorporated overseas who were granted a licence to conduct business in Bermuda by the Minister of Finance).

Trends and reforms

Are there any emerging trends or hot topics in the law of insolvency and restructuring? Is there any new or pending legislation affecting domestic bankruptcy procedures, international bankruptcy cooperation or recognition of foreign judgments and orders?

The Bermuda insolvency and restructuring practice is at an interesting juncture. With increased regulation across the financial services industries (particularly insurance), the organic development and evolving flexibility of provisional liquidation on a ‘light touch’ basis, and the absence of statutory provisions governing provisional liquidation, the courts will be required to conduct an important balancing act when considering in particular the competing interests of creditor rights against the need to have deterrence-based regulation, as well as the costs of prolonged provisional liquidation against the prospects of a successful restructuring. While the courts have allowed provisional liquidation to evolve into a malleable tool that plays a vital role in cross-border business, it is anticipated that the courts may in due course start defining the boundaries and scope of provisional liquidation in a more clear and systematic manner.