Prioritizing Business Rescues Above Liquidation And Receivership

Resolving insolvency has been in one of the critical bottlenecks SME's face in Nigeria due to domestic legal entities involved in the process. The Presidential Enabling Business Environment Council (PEBEC) in collaboration with the Corporate Affairs Commission (CAC) is working on implementing some reforms to make resolving insolvency easier, faster and more efficient in Nigeria. Although some reforms have already been implemented, some are still in the pipeline.

Reforms that are being reviewed for Ease of Resolving Insolvency in the Companies and Allied Matters (CAM) Bill 2018 to be passed

Rescuing businesses that are in debt and are unable to pay off their debt


  • Companies don't have to wind up immediately if unable to pay a debt with the introduction of Administration provision (Business Rescue)
  • Companies now have access to business rescue alternatives that includes a Company Voluntary Arrangement and Administration.
  • Winding Up and Receivership will be converted to Administration and during this process, there will be a suspension on the enforcement of securities, court actions, confiscation of assets, etc
  • Under Administration, an Administrator can also deny unprofitable and overly burdensome contracts with leave of court
  • If there are certain undervalued transactions that may have caused a company’s debt issue, the company can obtain a court order restoring it to its previous position.
  • During winding up or a reorganization, contracts for the supply of essential services may be entered into or continued on the basis that the supplier obtains a personal guarantee by the officeholder in charge of rescuing the company.

Rescuing businesses that are in debt and are unable to pay off their debt

Right of Secured Creditors in Insolvency


  • A company’s debt would need to be a minimum of N200,000, for a winding-up petition to be made against a company
  • The interests/claims of shareholders with fixed charges are more important than claims and expenses of winding up
  • While a company is being wound up, only a fixed charge holder (or any other validly created and perfected security interest holder other than a floating charge holder) can enforce security, seize, attach or levy execution on the assets of the company


The Companies and Allied Matters (CAM) Bill will invalidate preferential (fraudulent) treatments, which result in creditors obtaining more than their share of the debtor’s assets

The CAM Bill will provide the possibility of the insolvency company to obtain post-commencement credit to finance its ongoing needs, where a new administrator is appointed.

An administrator can accord priority to post-commencement credit, subject to approvals of the creditors.

Corporate Affairs Commission (CAC)

Website -

Office address - Plot 420, Tigris Crescent, Off Aguiyi Ironsi Street, Maitama, Abuja, Nigeria.

Phone - +234-818-229-8971 / +234-818-229-9016 / +234-908-740-1600 / +234-908-740-1599 / +234-908-740-1598

Twitter - @cacnigeria1

Facebook - @cacnigeria1

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