CORPORATE RESCUE OF FAILED CORPORATE ENTITIES IN NIGERIA: A PATHWAY TO ECONOMIC SUSTAINABILITY

Abstract

Corporate insolvency law traditionally focuses on winding-up (commonly referred to as liquidation in comparative insolvency literature) as the primary legal response to corporate financial distress. However, contemporary insolvency systems increasingly recognize that winding-up is not always the most economically efficient outcome where financially distressed firms remain viable. Modern insolvency frameworks therefore incorporate rescue mechanisms designed to rehabilitate distressed companies and preserve them as going concerns. This paper examines corporate rescue as a pathway to economic sustainability and argues that the effective activation of rescue mechanisms is essential for strengthening Nigeria’s corporate insolvency regime. The study adopts a doctrinal and comparative analytical approach, drawing primarily from Nigerian statutory law, particularly the Companies and Allied Matters Act 2020, while incorporating insights from established rescue regimes in the United Kingdom, United State, and South Africa. The paper analyses the conceptual foundations of corporate rescue and winding-up, evaluates relevant scholarly perspectives, and examines the causes and consequences of corporate insolvency. It further explores the economic and social implications of winding-up and assesses the role of rescue-oriented mechanisms in preserving viable enterprises. The study finds that although Nigeria has formally introduced modern rescue procedures such as administration and company voluntary arrangements, their practical utilization remains limited due to institutional constraints, professional capacity gaps, and the persistence of a winding-up-oriented legal culture. The paper concludes that activating corporate rescue mechanisms is critical to preserving productive enterprises, protecting employment, improving creditor recovery, and promoting sustainable economic development in Nigeria.