Why Would You Lose a Lawsuit on Purpose?

Because that's how you can escape financial regulators.

The Chinese government limits its citizens to moving $50,000 per year overseas. But as the Chinese economy is shaky, many investors would like to smuggle their money out of the country to more secure locations.
The Wall Street Journal reports on a clever new way that Chinese capital managers are trying to do precisely that. First, set up a shell company overseas. Then have that company sue you. Settle the lawsuit and pay the company, thus moving your money to the shell company, beyond the reach of Chinese government regulators:

In a post published on Sunday on Seattle-headquartered law firm Harris & Moure’s China Law Blog, Mr. Harris detailed his conversation with an adviser to a Chinese company. The adviser had called him essentially to ask Harris & Moure to help the Chinese company deliberately lose a lawsuit for a phony breach of contract that would result in a payout of $3.5 million, which the Chinese company would then send to the U.S.
The money, as it turns out, would be paid to entities in the U.S. controlled by the Chinese company itself.
Mr. Harris told China Real Time that the company, a privately-held Chinese manufacturer, wanted to pursue such a fake arbitration, rather than fake a simple legal settlement for the same amount of money, because it was concerned about convincing government regulators who have been closely scrutinizing offshore remittances.
“They wanted it to look really official,” he said in a phone interview. “Arbitration also moves quickly, so they could conceivably do it within three months.”