*”BRIPAN President Ihekweazu: ‘Our Legal Structures Must Address Economic Challenges Effectively'”
*”NBA President Osigwe: ‘Effective Insolvency Processes Critical for Protecting Jobs and Investor Confidence'”
*”PwC’s Ndebbio Warns: ‘Tax Compliance Crucial in Insolvency Cases to Avoid Exacerbating Financial Distress'”
*”Ogala SAN: ‘Nigeria Not Yet Ready for Global Arena in Cross-Border Insolvency'”
*”Eneda Emphasizes: ‘Transparency and Regular Communication Key in Complex Insolvency Cases'”
*”CAC Reveals Slow Uptake Of New Insolvency Processes Despite CAMA 2020 Reforms”
Amidst Nigeria’s persistent economic challenges, stakeholders at the 2024 Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN) annual conference voiced the need for immediate reforms to the country’s insolvency and business recovery frameworks.
According to the organizers, BRIPAN’s 2024 conference, which was held at the MUSON Centre, Onikan, Lagos, has set the stage for a renewed push toward reforms that will foster business recovery, protect jobs, and promote economic growth in Nigeria.
Key players from the legal, financial, and business sectors gathered to discuss strategies for improving Nigeria’s insolvency systems, advocating for better regulatory structures and enhanced judicial approaches.
At the heart of these concerns is a consensus among stakeholders that Nigeria’s business environment needs urgent reforms.
Justice of the Federal High Court of Nigeria, Justice Simon Amobeda, highlighted the urgency of modernizing Nigeria’s insolvency laws through legislative reforms.
In his presentation on “Strategies for Fostering Judicial Expertise in Insolvency and Restructuring,” he argued that as financial systems grow more complex, the judiciary must be equipped with modern tools to manage restructuring cases effectively.
He noted that as the complexity of financial systems and corporate entities continues to grow, so too does the necessity for enhancing judicial expertise in these matters.
“This calls for a concerted effort to equip our judges with the requisite knowledge and skills to address the challenges posed by modern insolvency and restructuring cases effectively,” he said.
On the challenges on handling insolvency and restructuring, Justice Amobeda lamented that limited judicial expertise in insolvency matters, procedural delays and inefficiency, lack of specialized insolvency courts, challenges in cross-border insolvency and among others affect the process of insolvency.
He lamented the current hurdles in Nigeria’s insolvency process, including limited judicial expertise, procedural delays, a lack of specialized courts, and challenges in handling cross-border insolvency cases.
“Legislative reforms that modernize insolvency frameworks can empower the judiciary to manage restructuring processes more effectively,” Justice Amobeda stated.
Promoting Alternative Dispute Resolution (ADR) was another key theme discussed. Foluke Akinmoladun, Managing Solicitor of Trizon Law Chambers, emphasized the role of ADR in addressing insolvency issues outside of courtrooms.
She stressed the advantages of mediation and arbitration in debt disputes, which not only reduce litigation costs but also help preserve business relationships. “By leveraging ADR, lawyers help preserve relationships, reduce costs, and achieve timely and fair resolutions,” she said.
She said:”In today’s complex legal and financial landscape, lawyers are essential facilitators of debt dispute resolution through mediation and arbitration.
“They provide invaluable expertise, guide their clients through ADR processes, and ensure that settlements and awards are legally sound and enforceable. By leveraging these alternatives to litigation, lawyers help preserve relationships, reduce costs, and achieve timely and fair resolutions”.
The Registrar General of the Corporate Affairs Commission (CAC), Hussaini Magaji, reinforced the role of the Companies and Allied Matters Act (CAMA) 2020 in reshaping Nigeria’s insolvency practice.
Ably represented by Terver Ayua-Jor, his Special Assistant, Magaji outlined the key insolvency processes introduced by CAMA 2020, including Company Voluntary Arrangements (CVA), Company Administration (CA), and Netting.
According to him, the utilitarian value of the concept of business recovery was more compelling now than in other times.
He stated that changes in approach and in legal framework came with the promulgation of the Companies and Allied Matters Act (CAMA) No.3 of 2020 Sections 434 –549 and 718 – 727.
Magaji said the Act introduced three new major insolvency processes which are; Company Voluntary Arrangement (CVA), Company Administration (CA) and Netting.
He added that the Act in section 705 (1) (d) recognised BRIPAN as one of the professional associations entitled to be given automatic authorisation to practice as insolvency practitioners by the commission.
Magaji said that in addition to the development of a framework for accreditation of insolvency practitioners, the commission issued insolvency regulations 2022 to drive the new framework.
The CAC registrar, however, noted that the current legal and administrative reforms had not translated into quantum leap in business recovery processes.
He said that in spite of the available legal reforms, less than 10 CVA & CA applications had been filed in the last three years of the issuance of insolvency regulation, while stating that there are still more filings of the traditional processes of liquidations and receiverships.
However, he lamented that despite these reforms, the uptake had been slow, with fewer than 10 applications for CVA and CA filed over the last three years.
“The current legal and administrative reforms have not yet translated into a significant leap in business recovery processes,” Magaji noted.
BRIPAN’s president, Chimezie Ihekweazu (SAN), expressed his concerns about the continued struggles of businesses in the face of government efforts to improve the economic welfare of Nigerians.
He underscored the importance of collaboration between regulators, the judiciary, and business leaders to improve Nigeria’s business recovery landscape.
“As leaders and key stakeholders in the insolvency and restructuring landscape, we are tasked with the responsibility of ensuring that our legal and regulatory structures are equipped to address these challenges effectively while promoting economic growth, financial stability, and long-term recovery,” Ihekweazu stated.
Ihekweazu further emphasized BRIPAN’s commitment to professionalizing insolvency practice in Nigeria. He noted that BRIPAN has introduced initiatives such as training programs, fellowship opportunities, and the promotion of legislative reforms, all aimed at aligning Nigeria’s insolvency frameworks with global best practices.
Mazi Afam Osigwe (SAN), President of the Nigerian Bar Association (NBA), added his voice to the call for collaboration between legal and financial experts to ensure that businesses facing financial difficulties are given a fair chance at survival. He stressed that well-structured insolvency processes are critical in protecting jobs and fostering investor confidence.
“Effective restructuring and insolvency processes are essential to preserving business value, protecting jobs, and fostering investor confidence,” he remarked, pledging the NBA’s continued partnership with BRIPAN to improve Nigeria’s regulatory framework on insolvency.
Another significant topic discussed was the need for Nigeria to strengthen its approach to cross-border insolvency. Senior Advocate of Nigeria, Babatunde Ogala, noted that while Nigeria has yet to adopt the UNCITRAL Model Law on cross-border insolvency, this was becoming increasingly crucial as more Nigerian businesses expanded beyond national borders.
He said: “Our economy is evolving, and our businesses are becoming regional. But I dare say, we have not reached that stage of playing on the global arena.”
He added that while some Nigerian businesses operate across borders, concerns over political dominance and legal complexities have slowed the implementation of cross-border insolvency laws in Nigeria and other developing countries.
Ogala also pointed out the critical role of the Companies and Allied Matters Act (CAMA) 2020 in regulating insolvency in Nigeria. “Today, in Nigeria, CAMA and to some extent, the Bankruptcy Act, are the key statutes regulating insolvency practice,” he said. CAMA introduced important reforms like Company Voluntary Arrangements (CVA) and Company Administration (CA) to improve business recovery, yet the adoption of these processes has been slow. He also highlighted that CAMA recognizes BRIPAN as a regulatory body for insolvency practitioners while empowering the Corporate Affairs Commission (CAC) to license them.
In addressing cross-border insolvency, Ogala noted, “There’s a lot of talk about the UNCITRAL Model Law, which is meant to facilitate insolvency practice beyond borders, without barriers, but it hasn’t been domesticated in Nigeria.” He added that only a limited number of Nigerian businesses engage in cross-border activities, and even those are largely confined to regional rather than global operations.
“How many Nigerian businesses can you really say are doing cross-border businesses? Most are still restricted to regional, not international, markets,” Ogala remarked.
He further explained the challenges of opening up to international insolvency frameworks, saying, “By the time you open up to the West, they will swarm us. We know it, and that’s part of the reason why we’re cautious.”
Ogala concluded by acknowledging the ongoing evolution of Nigeria’s business environment but noted that there is still much work to be done before Nigerian companies can truly compete on a global scale.
Senior Partner at Punuka Attorneys and Solicitors, Dr. Anthony Idigbe (SAN), echoed this sentiment, advocating for BRIPAN to achieve chartered status and urging practitioners to deepen their knowledge and collaboration in handling cross-border cases. He argued that adopting international standards would strengthen Nigeria’s business climate and improve investor confidence.
The conference also tackled tax and compliance issues in insolvency practice. Ugochi Ndebbio, Associate Director at PwC Nigeria, warned that insolvency practitioners must remain vigilant about tax compliance when managing business recovery cases.
She noted that global trends indicate an increasing focus on tax transparency, and failure to comply could worsen the financial distress of troubled companies.
“There’s an increased focus across the world, not just in Nigeria, around tax compliance and transparency. Insolvency practitioners need to take this seriously to avoid exacerbating the financial challenges faced by distressed companies,” Ndebbio cautioned.
Mrs. Ebelechukwu Eneda added to the discussion with her emphasis on transparency and accountability in the role of the insolvency practitioner. Speaking on “Transparency and Accountability in the Role of the Insolvency Practitioner,” she highlighted the importance of regular, transparent communication and financial reporting, particularly in complex insolvency cases involving numerous stakeholders, such as those involving Ponzi schemes with thousands of investors.
“Ensuring that all stakeholders are well-informed can prevent confusion,” Eneda said. She stressed that keeping creditors, employees, courts, and regulatory bodies updated throughout the process is essential for maintaining confidence and ensuring fair outcomes.
With businesses struggling to recover from financial difficulties, participants stressed the need for a collective effort to modernize the country’s insolvency framework, strengthen cross-border insolvency laws, and promote practices that align with global standards.