LEGAL APPRAISAL OF PROCEDURES FOR RESOLVING INSOLVENCY IN CORPORATE ENTITIES IN NIGERIA

Abstract

Companies remained one of the vehicles for carrying out business activities globally. A company comes into existence when it is incorporated pursuant to the extant legislation on incorporation of companies in order to carry out its activities, a company needs debt capital as the assets and equity capital are not usually sufficient. Unfortunately, it is not always the case that the borrowed capital is settled as and when due. The Companies and Allied Matters Act 2020, as amended (CAMA 2020) provided for the powers of a company to borrow and the procedures to resolve insolvency matters. This paper adopted the doctrinal approach and relied on both primary and secondary sources of law to analyse the procedures for resolving insolvency. The procedures analysed in this paper included restorative procedures such as company voluntary arrangements and administration, and terminal procedures such as receivership and winding up by the Court are ultimately prejudicial to the continued existence of the insolvent company. In light of this, the recommendations of this paper included that the National Assembly should amend the provisions of the CAMA 2020 by deleting receivership and winding up by the court as available procedures for resolving insolvency. However, where this recommendation is not feasible, appointment of receiver and winding up by the court should be default procedures to be invoked where the restorative procedures fail or are impossible.