LEGAL STATUS OF COMPANIES IN RECEIVERSHIP IN LINE WITH THE 2025 SUPREME COURT OF NIGERIA PRONOUNCEMENT IN DAGAZU’S CASE

Abstract

In order to carry out its business, a company ordinarily requires capital. The needed capital can be equity capital or debt capital. In most cases, equity capital is never sufficient for the flotation of a company, hence, the resort to debt capital. The powers of a company to carry out its business through debt capital are provided for in section 191 of the Companies and Allied Matters Act 2020 as amended (CAMA 2020). While creditors may find comfort in secured transactions, enforcing such security is often not seamless. Receivership, a remedy arising from secured credit agreements and statutory provisions, is one of the strongest mechanisms available to debenture holders for enforcing or realising securities. In practice, receivership allows debenture holders or creditors to enforce proprietary security and recover debts. However, appointing a receiver has serious implications for the debtor company, including threats to its continued existence. This paper adopted the doctrinal research approach and found, among other things, that the Supreme Court of Nigeria’s decision in Dagazu Carpets Ltd v Bokir International Co. Ltd (2025) 8 NWLR (Pt 1992) 271, has significantly altered prior understandings of the legal status of companies in receivership, particularly regarding the powers of directors, employment tenure, and the legal personality of the debtor company. One key suggestion made in this paper is that the Supreme Court of Nigeria should, at the earliest opportunity, reverse its position.