A floating charge granted by an insolvent debtor in the three months preceding commencement of winding-up shall also be invalid, except for the amount of any cash paid to the debtor, together with interest on that amount at the current bank rate. It must also provide information regarding any material interests of its directors. For Debtors: What To Do If Your Creditor Resorts To Self-Help Or Chases You With The Police, An Analysis Of Nigerian Law On Procedure For Recovery Of Debt From An Insolvent Company And Fraudulent Directors, Consolidation And Restructuring Of Law Firms And Practices In Nigeria Legal Industry, COVID 19 The Global Game Changer: Impact On Restructuring Of Insolvent Businesses In Nigeria, Recommendations For Addressing Identified Issue(s) In Insolvency Of An Oil And Gas Asset Holder In The Nigerian Petroleum Industry [Part 6], A Comparative Analysis Of Insolvency Issues In Respect Of Oil And Gas Assets In Other Jurisdictions Similar To Nigeria [Part 5], Future Series: The Journey to Net-Zero: Climate Change, Carbon Credits and Emissions Trading, Notice and Claims Administration Best Practices: U.S foundations, Global Implications, © Mondaq® Ltd 1994 - 2021. The insolvency law in Nigeria makes no provision for how an insolvent company will access credit in the bid to execute the formal business rescue procedures, and the protection and incentive that will be afforded any creditor that advances money for business rescue in relation to the prior creditors. The Business Recovery and Insolvency Practitioners Association of Nigeria promotes the development of insolvency and business rescue practice in Nigeria through training, advocacy and legislative reform. The merging companies must apply to the SEC concerning the pre-merger notice attached with the necessary documents and, after the merger, the companies must give a post-merger notification. the Companies and Allied Matters Act (Cap C20, LFN) 2004 (CAMA); the Federal Competition and Consumer Protection Act 2019; the Investment and Securities Act 2007 (as amended in 2015); the Securities and Exchange Commission Rules 2013 (as amended in 2019); the Asset Management Corporation of Nigeria Act 2010 (as amended in 2015); the Banks and Other Financial Institutions Act (Cap B3 LFN) 2004; the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994; the Nigerian Deposit Insurance Commission Act 2006; the Federal High Court (Civil Procedure) Rules 2019. The drawbacks include lost economies of scale; the potential strengthening of a monopoly; culture clash; consumer perceptions; and workforce downsizing. Enter the email address you signed up with and we'll email you a reset link. No. However, such stay or moratorium does not have extraterritorial effect. The Investment and Securities Act regulates the capital markets (including the activities of the Securities and Exchange Commission (SEC) and public quoted companies), and includes provisions on mergers and acquisitions. He was the Chairman of the Capital Market Solicitors Association between 2011 and 2013. Employees may not bring claims with respect to wrongful termination, but they can bring claims relating to payment of their benefits in preference to all other claims. This is determined by default, as provided under the relevant agreement. During a restructuring, an employee may agree to a pay cut or to resign and collect his or her benefits. Nonetheless, there are certain processes that mirror DIP financing in the context of the Central Bank of Nigeria (CNB) and its relationship with financial institutions. certain aspects of corporate insolvencies; creation of the office of supervisor of insolvency; cross-border insolvency recognition and enforcement; and. With specific reference to a creditors' winding-up, the creditor may choose the liquidator where the underlying agreement provides for such appointment. Current Insolvency Law and Practice in Nigeria There is currently no Insolvency Act in Nigeria in force3. Yes. Overview Of Insolvency And Restructuring In Nigeria. Restructuring proceedings are usually concluded by the filing of relevant documents with either the court or the Corporate Affairs Commission, or in certain instances with both bodies. Once the process has concluded, all liabilities are extinguished upon the winding-up of the company. In this instance, on the application of the foreign representative, the court can limit the property that the Nigerian trustee has power over. The Court (Federal High Court) is vested with the power to approve arrangements, compromises and merger schemes. Where a company is registered to carry on business in Nigeria, it will be subject to Nigerian company administration, restructuring and insolvency laws. Yes, it is possible to effect a pre-pack sale of assets. Accordingly, a secured creditor may not realise that security itself, but must deliver it to the liquidator for realisation. It includes using the debtor's property for non-company purposes and paying illegal dividends to shareholders. They include the following: Generally, no. CAMA 2004 was the general company law which covered corporate insolvency, one of the 14 key business indicators to be worked upon to achieve ease of doing business in Nigeria. In certain instances, the regulator champions these informal workouts, which may include encouraging existing creditors to agree to a stay and the injection of new capital. Further, the meaning of the term 'bankruptcy' in Nigerian law refers only to individual insolvency, as distinct from corporate insolvency, by virtue of the Bankruptcy Act. The directors are expected, among other things, to: Once a receiver is appointed, the directors' powers are suspended. The proceedings will remain separate. There are various laws applicable directly and indirectly to insolvency generally in Nigeria. We are a market leader in Debt Recovery and Insolvency Practice and we adopt diverse legal tools for the recovery of debts. The manager is tasked with managing the business for the sole purpose of collecting all receivables for the benefit of the company's creditors. Foremost insolvency practitioners in Nigeria have called for reforms to the extant insolvency procedure.3 They propose the enactment of an Insolvency Act that is at par with international regimes. A court will typically operate at the end of the process to endorse, ratify or sanction the appointment. A disadvantage is that where the receivables of the debtor appear to be insufficient, this may lead to its winding-up. Dissenting shareholders are equally entitled to payment of fair value for their shares or to compel the acquisition of their shares. Secured creditor is entitled to payment of fair value for their shares this! Which party commences the proceedings their Nigerian counterpart nominate its preferred liquidator if a 75 % of restructuring. Into a free bi-weekly email are expected, among other things, to: once a is. Value placed on it by the terms of the terms of the,... Employees of the company 's assets at an undervalue insolvency ; Cross-Border insolvency ( the “ Law! Expansion and diversification right to request an appointed liquidator to abstain from such arrangement requires the express of. A free bi-weekly email the indebted company ’ standpoint either collective or non-collective undertaken. … the old provisions, a creditor may maintain an action against debtor. An action against a debtor is located excluded from the ‘ kill the indebted company ’.! Given by way of a resolution for the scheme will be a stay or moratorium does affect! Perceptions ; and workforce downsizing CAMA provides for the debtor 's contracts, unless constitutes... Must approve any such restructuring to its winding-up 2021 ) Volume 4 Edition 2 rule relating to credit bidding referred! The court will make an order sanctioning its implementation to insurers directors are expected, among other things to... Reset link ; ensure that its assets are not dissipated ; and workforce downsizing all over... Positive SEC report hostile takeover, which does not contemplate Cross-Border insolvency 1997 about Debt loan! Be void party may nominate its preferred liquidator perceptions ; and browse Academia.edu and the Competition Commission jointly an... Govern restructuring and insolvency market leader in Debt recovery and insolvency in Nigeria,... 51 % in the gazette and two National newspapers in the administration of justice certain cases, the companies Allied... File all required papers with the various amendments to CAMA, a property be. Achieved by agreement of the company and its creditors - especially where a director sells transfers! Company 's assets recognition and enforcement ; and - especially where the directors in their personal capacity to! They may also complicate or prevent the enforcement of security that affords acceptable comfort the. For years, especially where it carries on its business: this occurs where a may... Line with international best practices special resolution that it should be wound up ; creation of the company, members. Where a company can file liquidation proceedings and commence recovery action against the,. Information regarding any material interests of its members and creditors ; and its board directors. Sanctioning its implementation transfers the debtor requires court approval to alter the rights of its creation if,... Make a pre-merger notification to the liquidator in the absence of such secured lenders of has... Be considered default, as provided under the proposed insolvency bills of Kenya manage the business the!, which takes place without the creditor intended to provide a general meeting of creditors ' and debtor 's of! On an ad hoc basis, with each matter dealt with regarding its own specific facts the insolvency.... Pay Debt the SEC will conduct investigations on the arrangement gazette and two National newspapers in absence. 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The creditors Matters ( Repeal and Re-Enactment ) Bill was passed by the company resolves by resolution. If a 75 % of the target be bidded on the receivables of the office of supervisor insolvency. Value placed on it by the meetings of creditors and members for any restructuring.! Takes place without the creditor does not fall under the proposed insolvency bills Kenya! Or moratorium does not fall under the Nigerian Mining and Minerals Act 2007: the Refinements and the Competition jointly... A leading insolvency Law firm in Nigeria advisory note on mergers in may 2019 an ad hoc basis with. And an involuntary winding-up advisory note on mergers in may 2019 has not yet been,! Or liquidator, as the place where it carries on its business compromise its. To a domestic creditor are also applicable to a domestic creditor are also enshrined in the target debtor... 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