Insolvency Law in Nigeria

Introduction

Debt is as old as human existence. In Nigeria, Insolvency procedures are mainly contained in the Companies and Allied Matters Act Cap C20 Law of the Federation of Nigeria 2004 (CAMA), even though there are pockets of other legislations with features of insolvency. Insolvency has been described as a situation when a legal or natural person is unable to pay debt. Over the ages, every definition or description of this concept has always pointed to the same result, that of inability to pay debt. Section 567(1) of the Companies and Allied Matters Act 2004 defines an Insolvent person as follows. Any person in Nigeria who in respect of any Judgement, Decree or Court order against him, is unable to satisfy execution or other process issued there on in favour of a creditor and the execution or other process remain unsatisfied for not less than six week. This denition requires an order of court to establish that a person is insolvent, whereas in practical situations, corporate insolvency means the inability of a debtor to meet with its commercial commitment to its creditors. The problem with this definition is that it is restrictive and does not put into consideration other processes that come into play before the order of the court. Insolvency, just like other Nigerian Laws, is based on common law, precedents and local statutes like CAMA and to some extent the Asset Management Corporation of Nigeria Act. On the other hand, Section 247 (1) of the Insolvency Act of UK 1986 denes it thus;

In this Group of parts except in so far as the context otherwise requires, Insolvency in relation to a company include the approval of a voluntary arrangement under part 1, the making of an administration order

or the appointment of an administrative receiver

In the United Kingdom Insolvency and Bankruptcy is substantially contained in a single statute. The main sources of law in this regard are the Insolvency Act of 1986, the Insolvency Rule of 1986, the Company Director Disqualification Act 1986, Employment Right Act 1986, Employment Right 1996, Part X11 of the Insolvency Regulations (EC) 1346/ 2000.Other aspects of laws that relate to Insolvency in UK includes case laws and Labour related cases. Over there, insolvency is categorized into two types.

i. Individual Bankruptcy which Part X of UK Act referred to as individual insolvency and corporate insolvency