The President of the National Industrial Court (NIC), Justice Benedict Kanyip, has urged judges handling failed bank liquidation cases to strictly adhere to the legal order of priority, insisting that depositors should rank ahead of all other claimants.
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He said depositors must take precedence over employees, shareholders, and unsecured creditors during liquidation proceedings.
Justice Kanyip spoke at the opening session of a sensitisation seminar for judges of the NIC and members of the Investment and Securities Tribunal, organised by the National Judicial Institute in collaboration with the Nigeria Deposit Insurance Corporation (NDIC) in Lagos.
The jurist also questioned the constitutionality of certain provisions of the NDIC Act that shield the corporation from garnishee orders and injunctions.
According to him, such protections may conflict with Section 287 of the 1999 Constitution, which mandates compliance with court judgments.
Justice Kanyip stressed the judiciary’s critical role in sustaining financial stability through the fair and timely resolution of disputes arising from failed banks and liquidation processes.
He noted that public confidence in Nigeria’s financial system depends significantly on effective judicial intervention.
“The financial sector is the backbone of economic growth, offering infrastructure for credit, investment, insurance, and commercial activities,” he said, warning that instability in the banking sector could trigger broader economic challenges.
Reflecting on Nigeria’s banking crises of the 1980s and 1990s, Kanyip recalled that the era was characterised by weak corporate governance, insolvency, illiquidity, poor asset quality, and rising non-performing loans, which eventually led to major banking reforms.
He also recounted a personal experience before the 2008 banking crisis when he was advised to obtain a loan to buy shares in a commercial bank, describing it as a clear lesson on the dangers of financial instability.
In his welcome address, the Managing Director and Chief Executive Officer of NDIC, Mr. Thompson Sunday, said the liquidation of failed banks remains a complex process, partly because insiders sometimes conceal or deplete assets before closure.
Sunday, who was represented by the Executive Director, Corporate Services, Mrs. Chidinma Osuji, said liquidation proceedings often generate legal disputes over creditor hierarchy, enforcement of claims, asset recovery, and contractual obligations.
He expressed optimism that stronger collaboration and understanding between regulators and the judiciary would reduce delays, minimise conflicting judgments, and boost confidence in Nigeria’s banking system.
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