INSOLVENCY LAW AND BUSINESS RECOVERY PRACTICES IN NIGERIA’S UPSTREAM PETROLEUM SECTOR: THE NEED FOR A PARADIGM SHIFT

Abstract

Insolvency and business recovery practices are not at infancy stage in Nigeria, although it has not crystallized to a full profession as it is practiced in other relatively advanced climes. As the global financial sector evolves, the focus of modern insolvency and business recovery practices have shifted from winding up of insolvent oil companies to reorganization, restructuring of such companies and its operations to foster economic stability and financial propriety. But the case is the reverse in Nigeria, as liquidation is seen as the panacea to insolvency. The study evaluates Nigerian insolvency and business recovery laws to sustain modern businesses practices to prevent incessant corporate failure. Many jurisdictions are now overhauling their insolvency and business recovery laws to support business practices and to reform the gaps identified. The study conducts comparative legal and policy analyses of solvency and business recovery laws in Nigeria, Malaysia, India, South Africa, United Kingdom and United States. These countries were selected because their insolvency and business recovery laws are business rescue driven. The study is a doctrinal legal research that adopts a point-by-point comparative approach with library research method. The study finds that Nigerian law on insolvency seems deficient with regard to business rescue, turnaround and restructuring. It concludes that, regulatory agencies in the selected countries are more effective than those in Nigeria because of the political will of the governments of the former to successfully turn around insolvent oil companies, save jobs and protect creditors by optimising businesses through restructuring and business turnaround strategies. The study therefore recommends reform of Nigeria’s insolvency and business recovery law and practices in conformity with the global best practices on insolvent companies rescued and creditors driven strategies for healthy economy.